EU fails to agree on Russian oil price cap, say diplomats

BRUSSELS, Nov 28 (Reuters) – European Union governments on Monday failed to agree on a price cap for Russian seaborne crude as Poland insisted the cap must be lower than a Group of Seven proposed cap to undercut Moscow’s plans for its invasion. The ability to fund Ukraine, the diplomat said.

“There is no agreement. The legal text has now been agreed, but Poland still cannot agree on a price,” one diplomat said. No date has been set for new talks, diplomats said, although the price-cap mechanism will take effect on Dec. 5.

If no agreement is reached on the idea of ​​a G7 price cap by next Monday, the EU will implement tougher measures agreed at the end of May – banning all imports of Russian crude from Dec. 5 and oil products from Feb. 5 , the Polish diplomat said.

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Hungary and two other landlocked Central European countries were granted exemptions from the ban on pipeline imports on which they depend.

The Group of Seven (G7) countries have proposed a softer version of the EU ban to keep oil supplies steady for the global economy, as Russia supplies 10% of the world’s oil.

It proposed that the European Union and other global customers continue to buy Russian crude, but only if it was at or below the level agreed by the G7. That would cut into the Kremlin’s revenue.

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The G7 has proposed a ceiling of $65-70 a barrel, but Poland and others believe this will not hurt Moscow as Russian crude is already trading below that range at $63.50.

Production costs in Russia are estimated at about $20, and Moscow reaps huge profits from its oil exports. Poland, Lithuania and Estonia have been pushing for a price cap of $30 a barrel.

“The Poles are completely uncompromising on prices and have not come up with acceptable alternatives,” the EU diplomat said. “Clearly, people are growing dissatisfied with Poland’s position.”

Malta, Cyprus and Greece worried that the G7 cap proposal was too low, hurting their big shipping industries, but diplomats said they had made some concessions in the legal text and were no longer an obstacle to a deal.

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The idea behind the G7 cap is to prohibit shipping, insurance and reinsurers from handling cargoes of Russian crude globally unless they sell for less than prices set by the G7 and its allies.

With the world’s major shipping and insurance companies based in G7 countries, the price cap will make it difficult for Moscow to sell its oil at a higher price.

Reporting by Jan Strupczewski; Editing by Alex Richardson

Our Standards: The Thomson Reuters Trust Principles.

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