EU member states are looking at whether to impose a ceiling on what they would pay for Russian oil as a way to hit Kremlin revenues, as they shy away from agreeing an immediate blockade on Moscow’s crude exports.
An oil price cap is one of a number of proposals being discussed as EU ambassadors prepare for talks in the coming days about more sanctions on
Moscow — the sixth such package since Vladimir Putin ordered the invasion of Ukraine two months ago.
‘[The talks are about] finding the best way to deny [Putin] the revenue that he needs,” said one person familiar with the conversations.
Another alternative would involve imposing an EU tariff on Russian oil, analysts say, forcing Russia to cut prices to stay competitive.
EU member states are divided over how aggressively to move against Russian energy, which is at the heart of the country’s economy. Russia provides more than a quarter of EU crude oil imports and member states have paid Moscow more than €13bn for oil since the war with Ukraine started, according to CREA, a research organization.
Germany and other countries have ruled out an overnight ban on Russian oil imports because it would harm their own industry, while EU officials fear a ban could drive up oil prices and even increase the Kremlin’s revenues.
Berlin is also wary of alternatives including the notion of a price cap on Russian oil. Nevertheless discussions about new EU curbs on Russian energy have gathered pace, including on the sidelines of meetings of the IMF and World Bank last week.
The US halted energy imports from Russia last month but has refrained from pushing the EU to do the same, recognising many countries’ dependence on Russian energy and the risk of damage to the world economy.
But Washington could help to enforce any EU cap on Russian oil prices by making it more difficult for Moscow to sell to others, possibly by threatening sanctions against any purchasers contemplating buying Russian oil at higher prices.