EU agrees to $60 price cap on Russian oil – POLITICO

European Union countries agreed to cap Russian oil prices at $60 a barrel, ending days of wrangling over how difficult it would be to touch Vladimir Putin’s fossil fuel income.

According to EU diplomats, a deal was reached on Friday after Poland, which had resisted a tougher cap, came on board.

Under the deal, the countries will ban their insurance and transport companies from facilitating shipments of Russian oil to third countries if it is sold for more than $60 a barrel.

The system will be reviewed every two months, one of the diplomats said. The goal is for the cap to be set at least 5% below the market price of Russian crude during the review process, the diplomat added.

The EU plan was drawn up following a G7 proposal to cap the price paid for Russian oil and is now expected to be widely implemented.

« The EU’s agreement on an oil price cap, coordinated with the G7 and others, will significantly reduce Russia’s revenue, » European Commission President Ursula von der Leyen said. « This will help us stabilize global energy prices, benefiting emerging economies around the world. »

The key question now is how Russia reacts.

The $60 price is above the level at which Russia sells most of its crude oil, giving Putin the chance to dismiss the West’s move as meaningless. He threatened to cut production, which would drive up global oil prices, and to stop supplying countries that adhere to the cap.

Under EU sanctions taking effect from Monday, maritime imports of Russian oil will no longer be allowed. The sanctions package also contained a ban on marine insurance for tankers carrying Russian oil around the world, but price caps would trump this, easing market disruption.

There were fears that EU sanctions could trigger a spike in oil prices if marine insurance had not been available under EU sanctions. As talks dragged on between EU countries in Brussels, the United States, which had first proposed the cap, stepped in to try to break the deadlock. Poland also secured a commitment from Brussels to start working on a new sanctions package against Moscow.

Poland, Estonia and Lithuania led demands for a tougher cap to do maximum damage to Putin’s war chest. « I welcome the EU’s political agreement on setting a price cap on Russian oil, » Estonian Prime Minister Kaja Kallas said on Twitter. « Criminalizing Russia’s energy revenues is at the heart of shutting down the Russian war machine. »

America Hernandez and Barbara Moens contributed reporting