The European Commission told member states that a $60-a-barrel cap on the price of Russian oil is proving effective in hurting the Kremlin’s access to petrodollars without disrupting the market, and will remain unchanged for now.
The bloc’s executive arm told diplomats from the EU’s 27 member states this week that most Group of Seven countries are unwilling to lower the threshold at this time, according to people familiar with the matter.
An International Energy Agency report, which formed the basis of a review of the cap, found the mechanism had achieved its goals of reducing Moscow’s revenue and preventing global oil prices from rising.
The agency’s latest monthly report said the limit reached the price at which Russian crude and petroleum products were sold.
The weighted average export price of Russian crude was $52.48 per barrel, excluding shipping and insurance costs. Urals crude, Russia’s key export blend, sold for $45.27 in the Black Sea, while grades such as ESPO, Sakhalin and Sokol, which are exported from Asia, traded for above the threshold, according to the IEA.
The G-7 previously agreed to review the price level in mid-March, and EU law states that the aim should be to keep the threshold at 5% below average market rates. On this basis, a group of member states, including Poland and Estonia, had pushed to lower the threshold.
Under the agreed rules, EU and G-7 companies can only provide shipping services and services such as the insurance needed to transport Russian oil to third countries around the world when the products are have bought at or below the threshold. Russia is free to transport and sell oil at any price if it does not use the services and ships of the G-7 and the EU.
Russia still relies on Western insurers to cover more than half of the tanker fleet that exports its oil, according to data compiled by Bloomberg.
However, EU member states were told there was some openness to possibly making the price cap mechanism less rigid, the people said, without specifying what that meant in practice.
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