European Union caps price of Russian oil at $60 a barrel

The European Union has reached a deal to cap the price of Russian seaborne oil at USD 60 per barrel in order to hit Russia’s revenues.

Taking to Twitter, the president of the European Commission, Ursula von der Leyen said, “The EU agreement on an oil price cap, coordinated with G7 and others, will reduce Russia’s revenues significantly. It will help us stabilise global energy prices, benefitting emerging economies around the world.”

“As you know the EU and other major G7 partners will have a full import ban on Russian seaborne oil as of December 5. But we need to ensure that emerging and developing countries continue to have access to some Russian crude oil at limited prices and thus, today the EU the G7 and other global partners have agreed to introduce a global price cap on seaborne oil from Russia,” Leyen said in a video on Twitter.

According to CNN, the West’s biggest economies agreed earlier this year to establish a price cap after lobbying by the United States and vowed to hash out the details by early December. But setting a number had proved difficult.

A price of USD 60 represents a discount of almost USD 27 to Brent crude, the global benchmark. Urals has been trading at discounts of around USD 23 in recent days, CNN reported.

The risk of settling on a lower price is that Russia could retaliate by slashing its output, which would roil markets. Russia previously warned that it will stop supplying countries that adhere to the cap.