Poland pleaded for a ceiling price of 30 dollars.

She finally gave the green light for an agreement, with the other countries of the European Union, on the ceiling at 60 dollars per barrel of the price of Russian oil, announced, Friday, December 2, the Polish representative to the EU , Andrzej Sados.

"We can officially approve this decision," he said in Brussels.

Limit revenue from Moscow

The agreement, which had been tied up on Thursday by the ambassadors of the EU member countries in Brussels, coordinated on this file with their G7 allies, in particular the Americans and the British, as well as Australia, remained suspended for the decision from Warsaw. 

The mechanism envisaged plans to impose a ceiling of 60 dollars per barrel on the prices of Russian oil sold to third countries, in addition to the EU embargo which comes 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 around 60 billion a year, recalls Phuc-Vinh Nguyen, an expert in energy issues at the Jacques-Delors Institute. 

The EU system must prohibit companies from providing services allowing the maritime transport (freight, insurance, etc.) of Russian oil beyond the $60 ceiling, in order to limit Moscow's revenue from its deliveries to countries like China or India. 

The instrument must reinforce the effectiveness of the European embargo which intervenes several months after that already decided by the United States and Canada. 

Russia is the world's second largest rough exporter and without this cap it would be very easy to deliver to new buyers at market prices. 

Currently, G7 countries provide insurance services for 90% of global cargo and the EU is a major player in sea freight, providing a credible deterrent but also a risk of losing markets to the benefit of competitors.  

A limited short-term impact

Poland was initially very critical of the effectiveness of the fixed cap, demanding a much lower price, some sources evoking 30 dollars a barrel. 

The price of a barrel of Russian oil (crude from the Urals) is currently fluctuating around 65 dollars, barely above the European ceiling, hence an effectively limited impact in the short term. 

The instrument proposed by the European Commission nevertheless plans to add a limit set at 5% below the market price, in the event that Russian oil should fall below the threshold of 60 dollars. 

The price must in any case remain higher than production costs to encourage Russia to continue deliveries and not cut the floodgates. 

"We are in the unknown"

Some experts fear a destabilization of the world oil market and wonder about the reaction of the OPEC countries, which are to meet on Sunday in Vienna. 

The Kremlin had already warned that Russia would no longer deliver oil to countries that adopted this cap. 

Effective Monday, the EU's embargo on Russian oil by sea will cut two-thirds of its crude purchases from Russia.

With Germany and Poland having decided on their own to stop deliveries via a pipeline by the end of the year, Russian imports will be affected by more than 90%, the Europeans claim. 

For Phuc-Vinh Nguyen, the proposed cap raises many questions.

“An oil price ceiling has never been seen. We are in the unknown,” he summarizes, stressing that the reaction of OPEC producing countries or big buyers like India or China will be crucial.  

According to him, a cap, even at a high tariff, will send "a strong political signal" to Russian President Vladimir Putin, because, once in place, this mechanism can be tightened. 

With AFP 

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