EU to abandon new Russian oil price cap plan
The EU has stepped back from its proposal to reduce the price cap on Russian seaborne oil sales, according to European Commission President Ursula von der Leyen, as cited by Agence France-Presse. The move was intended to be a major component of the bloc's latest package of sanctions against Russia.
Following the escalation of the Ukraine conflict in 2022, the EU and G7 nations introduced a price cap and embargo on imports of crude oil and refined petroleum products from Russia, aiming to stem the flow of revenue to Moscow. The European Commission had proposed lowering the cap to $45 per barrel from the current $60 rate.
The current limit 'had little effect, but in the last days, we have seen that the oil price has risen [and] the cap in place does serve its function,' von der Leyen said on the sidelines of the G7 in Alberta, Canada, as cited by the news agency. 'So for the moment, there's little pressure on lowering the oil price cap.'
Global prices for crude had dropped below the G7 cap, but surged shortly after Israel began its missile attack against Iran last week. Brent crude for August delivery was trading at $76.36 per barrel on Wednesday, while West Texas Intermediate for July delivery reached $74.82 per barrel.
The European Commission unveiled its 18th package of sanctions on Russia last week, targeting energy exports, infrastructure, and financial institutions.
In addition to proposing a lower oil price cap, the measures, framed as a tool to pressure Moscow into ending the Ukraine conflict, include a ban on any future use of the sabotaged Nord Stream pipeline, restrictions on imports of refined products made from Russian crude, and sanctions on 77 vessels which the West considers part of the so-called Russian 'shadow fleet' allegedly used to bypass oil trade restrictions.
The sanctions package still requires unanimous approval from all 27 EU member states to take effect.
On Monday, Bloomberg reported, citing sources, that Brussels faced opposition to lowering the Russian oil price cap not only because of the recent price spike, but also due to US resistance. The news agency said the final decision rested with US President Donald Trump, who left the G7 gathering early due to escalating Iran-Israel tensions.
Moscow has dismissed the sanctions as illegitimate and counterproductive. Russian President Vladimir Putin has set the lifting of sanctions as a condition for resolving the Ukraine conflict.
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