EU Accepts Cap on Oil Prices

According to European diplomats, EU ambassadors reached a consensus on new sanctions, including a price cap on Russian oil sales, to counter Vladimir Putin’s war with Ukraine.

After the Russian president threatened to use nuclear weapons and called up hundreds of thousands of reservists, Ursula von der Leyen, the president of the European Commission, proposed the package, which is the eighth round against Moscow.

Concerns about the new measures, particularly the oil price cap, were voiced by a number of EU nations.

“We have moved quickly and decisively,” said von der Leyen on Oct. 5, adding “We will never accept Putin’s sham referenda nor any kind of annexation in Ukraine. We are determined to continue making the Kremlin pay.” 

The Kremlin’s cash pile has grown since the invasion started in February thanks to tens of billions of euros in fossil fuel sales to Europe, despite increased efforts by EU governments to switch away from Russian energy.

The latest sanctions plan expands on existing measures, including a ban on the majority of Russian crude oil imports, which will go into effect in December. As a result of Putin’s power struggles and the destruction of the two undersea Nord Stream pipelines, imports of coal have already been reduced significantly, and gas supplies from Russia to Europe have been severely disrupted. 

The challenge facing European leaders this winter has been to find fresh approaches to reduce Moscow’s energy revenue without running the risk of shortages, skyrocketing prices, and potential power outages at home.

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According to diplomats who spoke on the basis of anonymity because the conversations were private, the general agreement reached on Oct. 4 was reached in the presence of the ambassadors, who later approved the draft legal text on Wednesday. 

The measures lay out the formal framework for the price cap that the G7 nations had previously agreed to. Although the U.S. has indicated that a decision will be made in the coming weeks, neither the actual price nor the price range of the future cap have been determined.

EU sanctions packages have a complicated past. For instance, Hungary fronted the opposition to proposals for a total ban on imports of Russian oil, delaying the process for weeks until it was granted exclusions for its own supply requirements. 

Even after the verbal agreement on Oct. 4 had been achieved in the chamber, some diplomats remained circumspect due to the tensions and challenges in the past.

The EU ambassadors were eager for a settlement to be reached on the sanctions package by Oct. 5 at the earliest. The meetings of European leaders taking place in Prague on Oct. 6 and Oct. 7 were not to be overshadowed by internal disputes about the issue.