The fierce debates among the EU leaders about the Russian oil price cap have eventually produced an agreement. The policymakers could not come to the common denominator ahead of the winter. Besides, Russian crude oil had already been sold at a huge discount. The EU authorities were poised to set the price cap at $65-70 a barrel. On December 5, the G7 group of major economies nailed down the price cap on Russian seaborne oil at $60 a barrel to "prevent Russia from profiting from its war of aggression against Ukraine".
The price policy on Russian petroleum products has been high on the agenda in the EU since Russia’s invasion of Ukraine. Brussels aims to step up the pressure of sanctions and slash the Kremlin’s revenue which is spent on the war machine. The EU authorities are overwhelmed by this idea which contradicts common sense. While the talks were in progress, oil prices were going down steadily. The thing is that proposed price caps are time-sensitive. Originally, the EU policymakers advocated for $65-70 a barrel, but these levels were too high, corresponding to the average historic price per barrel recorded in early 2022.
“Russian oil currently trades at a significant discount compared to Brent, around $65 per barrel,” senior analyst at Bruegel Simone Tagliapietra commented on the anticipated price cap. In other words, the painstaking talks make no sense and the EU leaders just wasted time at endless meetings. Russian crude is now invoiced at $25-40 a barrel without any price caps. Oddly, the price limit which Brussels insists on is not a punishment but a dream of Russian oil suppliers.
