Russian Oil Price Cap Negotiations Are Postponed
- Recent reports indicate that EU countries are stuck in negotiations over the Russian oil price cap.
- Poland wants to cut Moscow’s revenues and set the price cap at $30 per barrel.
- Most other EU countries want to ensure that Russian oil does not go away from the market.
Why Russian Oil Price Cap Negotiations Are Stuck?
Oil traders continue to wait for the news about the Russian oil price cap. Yesterday, WTI oil found itself under significant pressure as reports indicated that the price cap would be set in the $65 – $70 range.
Today’s reports show that EU countries failed to reach consensus on the oil price cap scheme, and negotiations were delayed until Friday.
While the majority of the European countries would be happy with the price cap of $65 per barrel, Poland believes that this cap is too generous to Moscow. According to recent reports, Poland should have the support of Estonia, Latvia, and Lithuania.
Meanwhile, Greece wants to set the price cap at $70 or higher as it wants to protect its oil shipping industry. Cyprus and Malta may also support Greece.
When Will The Price Cap Be Announced?
At this point, it looks that negotiations will continue on Friday. As Poland reportedly wants to set the price cap at just $30 per barrel, reaching consensus on the deal may take more than one day.
The $30 price cap, which has not been discussed by most countries, will certainly push a significant amount of Russian oil out of the market, as Russia would not supply oil at this price.
It remains to be seen whether Poland will try to defend its proposal as other countries are trying to keep Russian oil flowing, which means that the price cap must be set at a “reasonable” level.
Russia said that it would not supply oil to countries that participate in the price cap scheme, but a “generous” price cap will provide all market participants with an opportunity to strike deals while maintaining their harsh public rhetoric.
It should be noted that EU countries do not have too much time for negotiations as the price cap mechanism should be announced before December 5.
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