A proposal to lower the current oil price cap could cost Moscow $650m a month, sources say
Three members of the European Union want to push the price of Russian oil below the current limit of $60, in a bid to reduce Moscow’s revenue from crude sales, Bloomberg reported on Tuesday.
Estonia, Lithuania and Poland want to lower the price cap to $51.45 a barrel, sources told media. According to the countries’ calculations, the measure would put Russian oil 5% below market prices and lower its revenue by $650 million a month.
The campaign by some EU states to lower the oil price cap was also reported separately by Polish radio station RMF FM. According to the station’s sources, Polish diplomats consider the current limit of $60 a barrel too generous for Moscow.
On Wednesday, EU officials are expected to begin talks on revising the price restriction, and unanimous support from member states is needed to introduce changes. According to RMF FM, there are “good opportunities” that the proposal will be approved.
In December, the EU, G7 countries and their allies introduced a collective ban on Russian oil imports by sea, along with a price cap of $60 a barrel. Another embargo banning almost all imports of Russian petroleum products and imposing price caps on diesel and other petroleum products went into effect on February 5.
The stated purpose of the price cap is to maintain Russian fuel supply by maintaining profitable trade, while limiting Moscow’s revenue from exports.
In response, Russia banned all oil transactions under the price cap system. In February, the country announced plans to voluntarily cut oil production in March by 500,000 barrels a day as it halts sales to buyers who meet the price cap imposed by the West.
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