Who and how in the EU is trolling on the price cap on Russian oil
Hungary and Cyprus oppose the European plan to impose a ceiling on the price of Russian oil. All the details
The European Union is having difficulty finding an agreement on imposing a price cap on Russian oil, and will likely end up postponing decisions.
OPPOSITE HUNGARY AND CYPRUS
According to EU rules, to impose sanctions it is necessary to reach unanimity: each member state, therefore, has the power of veto. According to Bloomberg sources, countries opposed to the Russian oil cap include Hungary and Cyprus.
Hungary is very dependent on Russian oil, and had already shown itself against the European embargo . In Cyprus, on the other hand, there are important shipping companies which would be penalized by the measure.
NEW SANCTIONS TO RUSSIA
Last weekend the European Commission met with member states to find a compromise on a package of restrictions on Russia. According to Bloomberg , national governments could press for a preliminary agreement to be reached before the informal meeting between European leaders in Prague, Czech Republic, on 6 October.
Brussels would like to impose new and tougher sanctions against Russia after President Vladimir Putin announced a partial mobilization – the goal is to increase the number of troops active in Ukraine by 300,000 – and the holding of referendums on the annexation of Ukrainian territories occupied militarily.
In addition to the price cap on Russian oil (a measure aimed at limiting the Kremlin's revenues: hydrocarbon sales are essential for the state budget), the Union is also discussing controls on diamond imports, bans on the purchase of some steel products and restrictions on exports to Moscow of electronic components used in weapons.
COORDINATION WITH THE G7
The ceiling on the price of Russian oil would align the European Union with the G7, the group that brings together seven of the most advanced economies in the world, which has already reached a political agreement on the matter. However, the details are missing, for example on the maximum price at which to fix the cap .
The measures, then, will have to enter into force before December 5, when the European ban on imports of Russian oil by ship will take effect (the mode of importation clearly prevalent in the European Union): supplies by pipeline are excluded from the embargo, for do not penalize Hungary, Czechia and Slovakia.
IS THE PRICE CAP EFFECTIVE?
However, the effectiveness of a possible price cap is unclear, given that two of the largest buyers of Russian crude oil – China and India – have no plans to join. However, Moscow sells oil to the two countries at a discounted price compared to the international benchmark.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/unione-europea-tetto-prezzo-petrolio-russo/ on Tue, 27 Sep 2022 08:35:52 +0000.