BRUSSELS: European Union member states agreed on Wednesday to temporarily maintain the existing price cap on Russian oil for another week, buying time to negotiate a broader package of sanctions against Moscow after failing to reach consensus before a deadline, diplomats said.
The last-minute compromise prevented the price cap from automatically rising above its current level of around $44 a barrel, a move Brussels feared would weaken efforts to curb Russia’s oil revenues as global crude prices have surged following the outbreak of conflict in the Middle East.
The decision came as the EU seeks to finalise its 21st package of sanctions against Russia since Moscow launched its full-scale invasion of Ukraine in February 2022.
According to diplomats, cited by AFP, the European Commission had proposed extending the existing oil price cap for several more months through the new sanctions package.
However, negotiations failed to produce unanimous backing after several member states objected to different elements of the package.
EU ambassadors were unable to conclude talks despite days of negotiations, according to AFP. Diplomats said member states now aim to reach a final agreement by July 23.
The proposed sanctions package has encountered resistance on several fronts.
Bulgaria said it had blocked a proposal to place Russian Orthodox Patriarch Kirill on the EU sanctions blacklist.
Diplomats also said Germany objected to a proposed ban on imports of Russian Alaskan pollock, a fish widely used in processed food products and children’s meals.
Other member states have sought to soften proposals introducing a broad visa ban on Russians who participated in the war in Ukraine, diplomats, cited by AFP, said.
The disagreements have delayed approval of the bloc’s 21st sanctions package since the Ukraine war started more than four years ago.
The EU’s latest discussions come after Russian President Vladimir Putin signed a decree on June 26 extending Russia’s own ban on supplying oil and petroleum products under contracts that apply the G7 and EU price cap mechanism until the end of 2027.
The ban, first introduced in February 2023, had previously been due to expire on June 30, 2026.
The decree prohibits exports of Russian crude oil and petroleum products to foreign companies or individuals if contracts directly or indirectly incorporate the Western price cap mechanism.
Under current EU rules, the price cap is set at 15% below the market price of Russia’s Urals crude and is reviewed every six months.
On June 9, the European Commission proposed temporarily freezing the cap at approximately $44.10 per barrel rather than allowing it to increase.
European Commission President Ursula von der Leyen said at the time that maintaining the existing level would “give oil markets time to stabilise while preserving pressure on Russia’s revenue”.
Commission Vice-President Kaja Kallas also defended the policy, saying on June 9 that Russian energy revenues “keep Russia’s war machine running”.
