The European Union is currently facing difficulties in lowering the established price cap on Russian oil. One of the reasons for this is the escalation of the conflict between Iran and Israel, which has affected the oil market situation and complicated the adoption of sanction decisions.
This is reported by Business • Media
Challenges in Adopting New Sanctions
Last week, the European Commission proposed to reduce the price cap on oil from Russia to $45 per barrel, significantly lower than the current level of $60. This was part of a new sanctions package aimed at limiting the Kremlin’s revenues from oil exports, which are used to finance the war against Ukraine.
However, some EU member states that agree with the principle of the cap have expressed concerns about the effectiveness of these measures without support from the U.S. During a meeting of ambassadors in Brussels, a group of countries emphasized the need to coordinate actions with G7 countries and stressed that the European Union is not ready to move forward without joint steps with American partners.
“The group of EU countries expressed concern about the price reduction at the ambassadors’ meeting in Brussels. Several countries also raised the issue of the need for coordination with the G7, indicating a reluctance to proceed without the U.S.”
Market Reaction and Outlook
In recent months, oil prices have decreased and even dipped below the cap set by the G7 countries. However, following the recent hostilities between Israel and Iran, the market reacted again with a sharp increase in oil prices, further complicating the alignment of new sanctions from the EU.
The European Union’s efforts, which are also supported by the United Kingdom, are aimed at reducing Russia’s profits from energy exports. However, against the backdrop of geopolitical tension, decision-making is becoming increasingly difficult.