G7 partnership agrees on $60 per barrel for Russia oil
The European Union’s members overcame Poland’s opposition and hammered out a political agreement earlier in the day. As a result, the Group of Seven (G7) countries and Australia announced they had agreed to a $60 per barrel price cap on Russian seaborne crude oil.
Following Poland’s support, the EU decided on the price, opening the door for formal approval over the weekend. The price cap will go into force on December 5 or very shortly thereafter, according to a statement from the G7 and Australia.
The nations stated that they expected any price revision to include a type of grandfathering to permit conforming transactions completed prior to the change.
The statement stated that “The Price Cap Coalition may also explore additional action to safeguard the effectiveness of the price cap.” There were no specifics about what additional actions might be taken right away.
The price cap, which was proposed by the G7, intends to lower Russia’s oil revenue while preventing a rise in world oil prices after an EU embargo on Russian petroleum takes effect on December 5.
Warsaw has rejected the suggested level while it looked for a mechanism for adjustment to keep the cap below the going rate. It had pushed for the restriction to be as low as feasible during negotiations with the EU in order to reduce income to Russia and restrict Moscow’s ability to fund its conflict in Ukraine.
Andrzej Sados, the ambassador of Poland to the EU, told reporters on Friday that Poland had supported the EU agreement, which included a mechanism to maintain the oil price ceiling at a minimum 5% below market rates. According to US officials, the agreement was unique and showed the coalition’s seriousness in resisting Russia’s war.
A spokesperson for the Czech Republic, which holds the rotating EU presidency and oversees the EU countries’ negotiations, said it had launched the written procedure for all 27 EU countries to formally greenlight the deal, following Poland’s approval.
G7 partnership agrees on $60 per barrel for Russia oil
Details of the deal are due to be published in the EU legal journal on Sunday. European Commission President Ursula von der Leyen said the price cap would significantly reduce Russia’s revenues. Russian Urals crude traded at around $67 a barrel on Friday.
