European countries are rushing to agree on a deal to cap Russian oil prices after President Vladimir Putin stepped up Moscow’s aggression in the war against Ukraine, Bloomberg reported Friday.
Efforts by European Union members to curb Russian oil prices gained momentum after Putin ordered the call-up of military reserves on Wednesday, people familiar with the matter told Bloomberg. The Russian leader has also secretly threatened to use nuclear weapons.
The price cap measure is likely to be included in a new sanctions package to be put forward by the European Commission, the EU’s executive arm, the people said in a report.
The oil market measures would unite the EU with the Group of Seven – Canada, France, Germany, Italy, Japan, the UK and the US – which agreed in early September to impose a price cap on Russian oil. The G7 did not comment on the details of its price cap.
The EU has just weeks to come up with a proposal for an oil price cap, as the measure would have to be in place when the bloc’s embargo on Russian offshore oil comes into effect on December 5.
According to Bloomberg, representatives of member countries and the commission will meet this weekend to discuss new sanctions.
The goal of the price caps is to limit Moscow’s income from energy exports, which help finance Russia’s war against Ukraine. The US is pushing for a limit that takes into account historical prices – about $60 a barrel.
But some analysts have warned that such measures could backfire if Moscow responds by cutting off oil supplies to the market. Analysts at Bank of America predict that could push Brent crude futures above $130 a barrel.
Russian Urals crude futures rose 1.5% to trade at $72.17 a barrel on Friday. Brent crude was down 2.0% below $87.74 a barrel, while WTI crude was down 2.1% at $81.72 a barrel at last check.
Ukraine’s top official said Wednesday that the need to curb oil prices is urgent as Moscow steps up its efforts in Ukraine.
“Russia is fighting the last fight, so we need to be even more united, including the sanctions policy,” said President Volodymyr Zelenskyy’s chief economic adviser Oleg Ustenko. “We must cut off the regime’s blood money they are using to kill our people.
Read more: US and allies move closer to price ceiling on Russian oil – which could cut Moscow’s revenue but send oil soaring