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The EU proposes to member states to limit the price of Russian oil at $60 Russia: a wishful one-man show Provider

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The EU proposes to member states to limit the price of Russian oil at $60 Russia: a wishful one-man show Provider
© Reuters. EU proposes $60 oil cap to member states Russia: A wishful one-man show

News from the Financial Associated Press on December 2 (edited by Shi Zhengcheng)Based on multiple media reports on Thursday, the EU executive agencyThe European Commission has proposed to 27 member states to limit the price of Russian oil at $60 per barrel.If the EU and G7 members can reach an agreement, the measure, which Russia shrugged off, will be rushed in time.On December 5, when the EU’s latest sanctions on Russia’s oil came into effect, they landed together

In addition to setting price limits, the proposal also requires member states toStarting from mid-January next year, the limit price will be reviewed every two months. Under this set of rules, as long as the price of Russian oil is lower than the price limit, companies in the relevant countries can provide shipping, insurance and financial services for it.

According to the text of the proposal seen by the media, the EU wroteThe specific price limit should be “at least 5% lower than the average price of Russian crude oil and petroleum products”. Reference prices will be provided by the International Energy Agency (IEA).

Senior officials from EU member states will continue to discuss the proposal later on Thursday and a decision is likely, according to people familiar with the matter. However, the Polish delegation with a more radical stance proposed that it needs to discuss with the country again. Lithuania and Estonia have also expressed dissatisfaction with this price, thinking that this price is even higher than the current price of Russian crude oil.

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Sanctions for sanction’s sake?

Diplomats from EU countries have engaged in intensive consultations over the past week for this price-limiting measure. But officials from many EU countries have also questioned the significance of the talks, which appear to have become a ceremonial move in balancing European and G7 interests.

To put it simply, there are two main purposes of this sanction, the first is toCompressing Russia’s oil revenuesand alsoGuarantee Russia’s continued supply of crude oil to the world. Therefore, Ukraine and Eastern European countries tend to keep the price limit as low as possible, but the US government wants the price to be slightly higher to ensure the stability of global energy prices.

Under such mutual pull, the price of $60 seems somewhat embarrassing. Although it is a bit lower than Brent crude oil, which is close to US$90 per barrel, the original trading price of Russian Ural crude oil will be a big discount on the basis of Brent oil.

According to Argus Media,A barrel of Urals crude exported from the Baltic port of Primorsk on Wednesday was worth less than $50 a barrel.

Compared with the price limit, what is more embarrassing is that Russia has made it clear that it will not sell oil to countries participating in the sanctions, which also makes the sanctions themselves more narcissistic.

Russian Presidential Press Secretary Dmitry Peskov said:It feels like they’re just making decisions for the sake of making decisions. According to President Putin’s instructions, Russia will not supply crude oil or natural gas to countries that introduce or join price cap measures. Of course, all factors need to be analyzed before deciding on a position.

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The U.S. Department of the Treasury can only smooth things over for the doubt that “Russian oil price limit is useless”. The price limit itself can provide bargaining chips for countries that continue to buy Russian crude oil. In addition, Russia must also use shipping, insurance and banking services from non-Western countries, which may also be more costly.

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