The mechanism provided for the imposition of a ceiling of 60 dollars a barrel on the prices of Russian oil sold to third countries, in addition to the EU embargo which will come into force on Monday. Russia has earned 67 billion euros from its oil sales to the EU since the start of the war in Ukraine, while its annual military budget amounts to about 60 billion a year, recalls Phuc-Vinh Nguyen, energy expert at the Jacques-Delors Institute.
“We can officially approve this decision,” Andrzej Sados, the Polish ambassador to the European Union, said in Brussels.
Limit revenue
The EU system must ban companies from providing services that allow the maritime transport (freight, insurance, etc.) of Russian oil above the $60 ceiling, in order to limit the revenue that Moscow derives from its deliveries to countries such as China or India. The instrument must strengthen the effectiveness of the European embargo which intervenes several months after the one already decided by the United States and Canada.
Currently, G7 countries provide insurance services for 90% of global cargo and the EU is a major player in shipping, providing a credible deterrent but also a risk of losing markets to competitors.
“Into the Unknown”
Poland was initially very critical of the effectiveness of the fixed cap, asking for a much lower price, some sources citing $30 a barrel. The price of a barrel of Russian oil (Ural crude) is currently hovering around $65, just above the European ceiling, so an impact effectively contained in the short term.
However, the instrument proposed by the European Commission provides for the addition of a limit set at 5% below the market price, in the event that Russian oil falls below the $60 threshold.
Some experts fear a destabilization of the world oil market and wonder about the reaction of the OPEC countries, which will meet on Sunday in Vienna.
The Kremlin had already warned that Russia would no longer supply oil to countries that adopted this limit. EU embargo on Russian oil by sea will cut two-thirds of its crude purchases from Russia from Monday
For Phuc-Vinh Nguyen, the proposed limit raises many questions. “There has never been a ceiling on the price of oil. We are in the unknown ”, she summarizes, underlining that the reaction of the OPEC producing countries or of the big buyers such as India or China will be crucial.
