Warsaw had delayed the agreement on the cap after demanding a lower cap to further erode Moscow’s income. His support means the bloc will have the initiative to put it in place before December 5, when the ban on imports of Russian marine oil into the EU comes into effect. The cap, which is to be adopted by G7 countries and some allies, is designed to keep Russian oil flowing to countries such as India and China, but at a lower profit to Moscow. It is intended to be global in scope because Russian oil importers, who rely on insurance coverage and shipping services from companies based in the EU and other G7 countries, will have to adhere to the price cap. However, Russia has said it will not sell oil to any country participating in the cap, and India and China have so far not said they will implement it. Russia is expected to rely on tankers ready to operate without Western insurance, although traders have warned that its exports could fall if it cannot access enough ships. Russia’s oil is already trading at a deep discount to international benchmark Brent. “We can formally agree with the decision,” said Andzrej Sadoś, Poland’s permanent representative to the EU, adding that the official publication of the legislation would likely take place over the weekend. The deal follows months of negotiations. US Treasury Secretary Janet Yellen, one of the forces behind this year’s price cap plan, welcomed the deal and praised Washington’s EU partners, saying it would “help us achieve our goal of curbing the main source of revenue Putin’s illegal Ukraine war while maintaining the stability of global energy supplies.” The cap is lower than the European Commission’s original proposed price of up to $70, following demands from Poland and other member states for a reduction. On Friday, benchmark Brent crude was trading around $86. Warsaw gave its approval after Brussels agreed to speed up work on a new package of sanctions against Moscow, which would include measures proposed by Poland. “We wanted to be absolutely sure. . . that we are working on a new, painful, expensive for Russia sanctions package,” Sadoś said. The cap agreement also includes a provision that the cap will be reviewed regularly to ensure it is “at least 5 percent” below average market prices for Russian oil. The price cap initiative was backed by the US, which wants to ensure Russian oil continues to be exported to avoid a global shortage that would trigger a spike in crude prices. The US hopes that India and China will still be able to use the existence of the price ceiling to negotiate bigger discounts. Yellen said the new price ceiling would particularly benefit low- and middle-income countries that have “already borne the brunt” of energy and food price inflation caused by the Russian invasion. “Whether these countries buy energy within or outside the cap, the cap will allow them to negotiate steeper discounts on Russian oil and benefit from greater stability in global energy markets,” she said in a statement. Some EU states had initially called for a price level of just $30, but Brussels officials feared that would lead Moscow to cut exports. A senior finance ministry official also dismissed the possibility that Russia could quickly avoid the price cap by providing its own insurance and services to shippers. “If Russia is spending money trying to create its own [shipping and insurance] ecosystem that helps us. . . with our first target, because they will have less money to fight in Ukraine,” the official said. Oil and gas flows are likely to account for 42 percent of Russia’s revenue this year, about Rbs 11.7tn ($191bn), the country’s finance ministry said. Additional reporting by David Sheppard and Derek Brower
