EU agrees $60 price cap on Russian seaborne oil – media reports

2 December 2022, 12:26 PM
The EU wants to limit the price of Russian oil (Photo:REUTERS/Christian Hartmann)

The EU wants to limit the price of Russian oil (Photo:REUTERS/Christian Hartmann)

European Union governments have tentatively agreed on a $60 a barrel price cap on Russian seaborne oil, the Reuters news agency reported on Dec. 1.

The initiative was first announced by the Group of Seven (G7) nations, which proposed to introduce an adjustment mechanism to keep the cap at 5% below the market price.

The agreement still needs the approval of all EU governments in a written procedure by Dec. 2.

An EU document seen by Reuters shows the price cap will be reviewed in mid-January and every two months after that, to assess how the scheme is functioning and respond to possible “turbulence” in the oil market that might occur as a result.

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The document said a 45-day “transitional period” would apply to vessels carrying Russian-origin crude oil that was loaded before Dec. 5 and unloaded at its final destination by Jan. 19, 2023.

The idea behind the G7 cap is to prohibit shipping, insurance and re-insurance companies from handling cargoes of Russian crude around the globe unless it is sold for less than the price set by the G7 and its allies.

According to the authors of the document, because the world’s key shipping and insurance firms are based in G7 countries, the price cap would make it very difficult for Moscow to sell its oil for a higher price.

As reported earlier, Russia has already lost up to 90% of its key oil market.

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