EU Price Cap On Russian Crude Oil to Stay at $60 a Barrel
The price cap on Russian crude oil is working and will remain at $60 per barrel for now, the European Commission told the EU, Bloomberg reported on recently, citing sources with knowledge of the matter.
The EU banned from December 5 maritime transportation services from shipping Russia’s crude oil to third countries if the oil is bought above the price cap of $60 per barrel, and imposed an embargo on seaborne imports of Russian oil into the EU.
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The EU believes that the price cap is working in its dual purpose to reduce oil revenues for Putin and at the same time keep global markets sufficiently supplied, the Commission told the EU’s 27 member states last week, basing its analysis on the latest reports and estimates from the International Energy Agency (IEA).
Russian oil revenues “are already dwindling,” the IEA said in its Oil Market Report for March. In February, Russia’s estimated oil export revenues fell to $11.6 billion. This was down by $2.7 billion from January when volumes were significantly higher, and nearly half pre-war levels.
“Russian fiscal receipts from oil sales were up 22% from January after export taxation rules were adjusted, but at $6.9 bn, just 45% of the level from a year earlier, according to the Russian finance ministry,” the IEA said.
Earlier this month, U.S. Energy Envoy Amos Hochstein said that the price cap on Russia’s crude oil and oil products was working well.
“I think the beauty of the process is that it is working and that Russian oil and Russian products are being traded below the price cap,” Hochstein said on the sidelines of the CERAWeek energy conference in Houston, as carried by Reuters.
Recent estimates have also shown that Russia continues to rely on Western insurance for more than half of the oil cargoes it sells, which could give leverage to the West if it decides to toughen the sanctions against Moscow.
According to Bloomberg’s report, there will not be a change in the price cap for the time being, despite a push from some EU member states, such as Estonia and Poland, for lowering the price cap.
