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European Union tentatively agrees on $60-per-barrel price cap on Russian oil

New DelhiEdited By: Sayan GhoshUpdated: Dec 02, 2022, 11:52 PM IST
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Representative image. Photograph:(Reuters)

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The EU also said that it will need the cooperation of all G7 nations to put pressure on Russia, but it remains to be seen how China and India will react to the price cap.

The European Union member states have agreed to put a price cap of $60 a barrel on Russian oil, AFP reported on Friday. The countries decided to follow the lead of the G7 economies who imposed a limit on Russian oil in a bid to hamper the revenues earned by the Kremlin. While the EU has already imposed multiple sanctions on Russia, they have not stopped the imports completely.

According to the agreement, the price cap will be reviewed to maintain it in accordance with the market fluctuations and special attention will be paid to ensure that it is “at least 5% below the average market price. While nearly all the members agreed on the oil price cap, Poland remained skeptical of the terms, but the government finally gave its nod keeping the adjustments in mind.

Earlier, Russia said that the price cap will hurt its economy and it will result in higher inflation. While countries like China and India continue to deal with Russia when it comes to oil and natural gas, the loss of the European market has come as a major blow to the struggling Russian economy.

The main objective behind the oil price cap is to cut finance to the Russian government who are currently involved in the invasion of Ukraine. Russia has already cut its supply to most European nations and the prevalent energy crisis is predicted to get worse with the price cap.

The EU also said that it will need the cooperation of all G7 nations to put pressure on Russia, but it remains to be seen how China and India will react to the price cap.