- Members of the European Union are working to implement a price cap on Russian oil, according to Bloomberg.
- Vladimir Putin threatened to strike back against what he sees as western nuclear threats Wednesday.
- The price cap will likely feature in new sanctions packages, sources said.
European countries are rushing to agree a deal to put a price cap on Russian oil after President Vladimir Putin ramped up Moscow’s aggression in its war on Ukraine, according to a Bloomberg report Friday.
Efforts by European Union members to place a limit on prices for Russian oil have gained momentum after Putin on Wednesday ordered a call-up of military reserves, people familiar with the matter told Bloomberg. The Russian leader also made a veiled threat to use nuclear weapons.
The price cap measure is likely to be included in a new sanctions package that the European Commission, the EU’s executive arm, will put forward, those people said, per the report.
The oil market measure would align the EU with the Group of Seven — Canada, France, Germany, Italy, Japan, the UK and the US — which agreed to implement a price limit on Russian oil in early September. The G7 has not spoken on the details of its price cap.
The EU has only weeks to hammer out the proposal for an oil price cap, as the measure would need to be in place when the bloc’s embargo on seaborne Russian crude kicks in on December 5.
Officials from member countries and the commission are set to meet this weekend for talks on the new sanctions, per Bloomberg.
The aim of price caps is to crimp Moscow’s revenues from energy exports, which are helping fund Russia’s war on Ukraine. The US is pushing for a limit that takes historical prices into consideration — about $60 a barrel.
But some analysts have warned such measures could backfire, if Moscow responds by cutting off its crude supply to the market. Bank of America analysts have forecast it could push Brent crude futures above $130 a barrel.
Russian Urals oil futures rose 1.5% to trade at $72.17 a barrel Friday. Brent crude slipped 2.0% to under $87.74 a barrel, while WTI crude was down 2.1% at $81.72 a barrel at last check.
A top Ukrainian official said Wednesday the need for an oil price cap is urgent as Moscow steps up its efforts in Ukraine.
“Russia is putting up a last fight, so we have to be even more united, including on sanction policy,” President Volodymyr Zelenskyy’s chief economic advisor Oleg Ustenko said. “We need to cut off the regime’s blood money that they’re using to kill our people.”
Read more: The US and its allies are getting close to a price cap on Russian oil – which could slash Moscow’s revenues yet send crude soaring