The cap on the price of Russian oil comes into force to undermine the income that Putin uses in the war in Ukraine

The European Union It applies from today its embargo on all imports of Russian oil transported by ship to the bloc and also the prohibition on transporting Moscow crude sold to third countries at a price above $60 per barrel agreed by the G7 powers.

Agreed upon by the heads of state and government at a summit in May, the veto on purchases of Russian oil by member states includes an exception for Hungarywhich will be able to be supplied through the one that reaches it by gas pipeline thanks to the fine print that Prime Minister Viktor Orbán scratched in said negotiations.

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However, the European embargo affects 90% of all the oil that Russia it sold before the war to community partners, who since March have redoubled their efforts to minimize their dependence on the Kremlin’s fossil fuels.

Besides, the European Comission stressed this weekend that the cap on the price per barrel agreed with the G7 “does not affect in any way the ban on imports into the European Union of Russian crude oil or petroleum products” nor to the “specific exceptions and derogations” that were agreed upon.

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It took several meetings of ambassadors before the European Union to unblock the cap at the European level on the price of Russian crude that the G7 and other international partners such as Australia have been pursuing for months at the proposal of the United States Treasury Secretary, Janet Yellen.

RESERVES IN POLAND

The main stumbling block was Poland, which was initially accompanied by the Baltics, demanded a much lower cap and also sought the guarantee that the bloc would prepare a new package of sanctions against Moscow. By contrast, Greece, Cyprus and Malta, whose ships transport much of Russia’s oil to other parts of the world, advocated a limit that would not jeopardize the business of their shipping companies.

Finally, The European Union vetoes as of today the transport of oil sold at a price higher than 60 dollars a barrel and also prohibits European operators from offering insurance and reinsurance services, intermediation or other financial services to all shipping companies that transport crude oil above the ceiling .

The measure includes a review mechanism every two months that will allow adjust the 60 dollars downward if the price of oil in the international markets falls below that number. The goal is to ensure that the limit is always at least 5% below the market price.

It also includes a 45-day grace period that will allow European operators to offer transportation or financial services as long as the crude has been shipped before Monday, December 5, and arrives at the port of destination before January 19.

UNDERMINING THE REVENUES OF THE KREMLIN

With this sanction, the European Union wants to attack one of the Kremlin’s main sources of income to finance its war in Ukraine. According to community sources, state revenue from Russia from the oil business represent 37% of the budget.

In addition, the European Commission estimates that the $60 cap is low enough to hurt Moscow’s accounts (it reckons it is now trading barrels at a discount to about $65), but also high enough that some oil Russian continues to flow to the rest of the world “at a limited price”.

The European Union In this way, it wants to take advantage of the weight of its maritime industry and its financial services for the transport of Russian oil. “It will not be easy to replace these European services, at least in the short and medium term, or in any case it will be very risky,” the sources predict.

From Brussels, therefore, it is believed in the existence of “incentives” or “natural interests” so that countries that are not part of the so-called “coalition to stop oil” join even indirectly to the initiative, using the $60 cap on your daily purchase operations.

Faced with this, the regime Vladimir Putin It has threatened to stop supplying oil to countries that support or resort to the ceiling of the price of crude oil agreed upon by the seven main powers of the globe.

Source: Elcomercio

jack

I am Jack Morton and I work in 24 News Recorder. I mostly cover world news and I have also authored 24 news recorder. I find this work highly interesting and it allows me to keep up with current events happening around the world.