- The European Union intends to resume talks on limiting the price of Russian oil, and member states hope to reach an agreement on the details.
- Premium varieties in Russia currently sell for $52, according to Bloomberg, meaning the $65 to $70 range won’t have the desired effect.
- The European Union has recently failed to agree on capping natural gas prices, and it hopes that these negotiations will be more successful.
Having failed to reach an agreement on a cap price for Russian gas, the EU intends to resume negotiations on limiting the price of Russian oil Friday night.
And, as with natural gas, the bloc has so far been unable to reach an agreement on how strict the price cap should be or how it should be enforced. Countries such as Poland are opposing the EU executive’s proposal to set the limit at $65 per barrel, saying it is too generous to Russia, while others, such as Greece, are reluctant to go below that level.
Indeed, Bloomberg reported that premium varieties in Russia are currently sold at $52 per barrelwhich means that the EU’s proposed $65-$70 level is unlikely to have the desired effect.
This is a reality that the Vice President of the European Commission, Valdis Dombrovskis, has acknowledged, saying: “If you set the price cap too high, it doesn’t bite very well. Oil is the biggest source of income for the Russian budget, so it’s very important to do it right so that it really affects Russia’s ability to finance this war.he told Bloomberg TV. First proposed by the United States, the price cap has a dual purpose: to keep Russian oil supplies going while limiting Moscow’s revenues.
Diplomats will be hoping that the cap talks actually succeed, despite recent plans to try capping natural gas prices across the bloc. come to a standstill after EU energy ministers failed to reach an agreement on Thursday amid deep divisions. However, Czech Industry Minister Josef Sikela said the ministers had managed to agree on other “important measures”, including joint gas purchases, solidarity of supplies if necessary, and speeding up the permitting process for renewable energy.
Sikela also said the ministers would meet again in December to try to resolve their differences.
Earlier this week, the European Commission published statement in doing so, it announced a so-called “safety price ceiling” for gas prices, set at 275 euros, or $283, per megawatt-hour.
Alex Kimani for Oilprice.com
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