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EU nears deal to lower Russian oil price cap

by More M.
August 14, 2025
in Energy
Russia

Credits: REUTERS/Mahmoud Hassano โ€”

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In its most recent sanctions package, the EU suggests lowering the cap on Russian oil prices. Every choice taken in one city can have an impact on markets thousands of kilometres away in the world of global trade. Officials work many hours behind closed doors analysing data, forecasts, and potential international responses. Because these decisions can impact energy costs, supply routes, and even the distribution of political power, the stakes are frequently bigger than they first seem. Weeks may pass during negotiations, but when an agreement begins to take shape, it may indicate a significant change.

The 18th Sanctions Package, which includes a lower cap on the price of Russian oil, is almost finalised

European Union envoys are on the verge of agreeing on an 18th package of sanctions against Russia for its full-scale invasion of Ukraine that would include a lower price cap on Russian oil, four EU sources said after a Sunday meeting. The sources said all the elements of the package had been agreed, although one member state still has a technical reservation on the new cap.

The sources โ€“ speaking on condition of anonymity to discuss confidential talks โ€“ said they expect to reach a full agreement on Monday, ahead of a foreign ministers’ meeting in Brussels the following day that could formally approve the package. The sources said they had also agreed to a dynamic price mechanism for the price cap.

Despite Slovak concerns, the EU is getting closer to implementing a floating cap on the price of Russian oil

On Friday, the European Commission proposed a floating price cap on Russian oil of 15% below the average market price of crude in the previous three months. One of the sources said the initial price would be around $47 a barrel based on the average price of Russian crude for the last 22 weeks minus 15%. Further, the price would be revised based on the average oil price every six months instead of the proposed three months.

Slovakia, which has held up the proposed package, is still seeking reassurances from the European Commission on its concerns about plans to phase out Russian gas supply, but it has agreed to the new measures, the sources said. Sanctions require unanimity among the EU’s member countries to be adopted.

The delicate balance between market stability and economic strain

The proposed change aims to convey a message to the larger international community in addition to punishing a specific nation. By reducing the price limitation, the EU intends to show that it can modify its approach when first steps prove insufficient, while also restricting Russia’s capacity to finance its activities. However, there are hazards associated with this approach, especially if other big economies, particularly those in Asia.

The following important factors have been discussed:

  • Effect on supply chains: Will shipping routes and tanker availability be affected by a reduced cap?
  • Reactions of the market: How many energy businesses and dealers react to more stringent restrictions?
  • International alliances: Instead of siding with the EU, may this choice drive certain nations closer to Russia? Because currently, Trumpย is unlikely to enforce the full tariff threat on Russian oil.

The Commission proposed the package in early June, aimed at further cutting Moscow’s energy revenues, including a ban on transactions with Russia’s Nord Stream gas pipelines and a financial network that helps it circumvent sanctions. Another one of the sources said the new package will list a Russian-owned refinery in India, two Chinese banks, and a flag registry. Russia has used flags of convenience for its shadow fleet of ships and oil tankers. With all that happening, OPEC is watching the oil market in Russia.

GCN.com/Reuters

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ยฉ 2025 by Global Current News

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ยฉ 2025 by Global Current News