European Union Hesitates to Independently Lower Russian Oil Price Cap

Facing anticipated refusal from G7 countries to lower the Russian oil price cap to $45, the European Union weighs its options, leaving global oil markets awaiting the next European sanctions.

Share:

Negotiations around capping Russian oil prices continue to raise many questions within the European Union (EU). The initial proposal aimed at reducing the current ceiling from $60 to $45 per barrel faces an apparent lack of unanimous support among Group of Seven (G7) members. While the EU had considered this measure as an integral part of its upcoming sanctions package against Russia, internal disagreements are now slowing down its adoption. Several European diplomats indicate that the issue of international unity dominates current discussions, though no definitive decision has been reached.

The G7 Unanimity Challenge

During a recent meeting of the EU’s Committee of Permanent Representatives (COREPER), several member states expressed concern over the need to act in coordination with key economic partners. The initial objective of the measure was to increase economic pressure on Russia, already targeted by numerous Western sanctions. However, the United States remains reluctant to implement such a significant price cap reduction, potentially concerned about repercussions for global market stability. Nonetheless, the United Kingdom and the European Union are exploring the possibility of independent action if G7 consensus fails to materialize.

Economic and Energy Implications

The proposal to reduce the price cap to $45 per barrel could directly impact global oil trade flows. Currently set at $60, the price cap limits Russian oil revenues while avoiding major disruptions to international markets. A threshold of $45 would likely result in a significant reorientation of trade flows toward other markets, particularly in Asia, where demand remains robust despite global economic constraints. Moreover, such a measure could push Russia to strengthen alternative trading strategies already in place to circumvent existing sanctions.

Other Measures Envisaged by the EU

Additionally, the EU’s eighteenth sanctions package against Russia includes other significant measures independent of the oil price cap issue. Among these is a total ban on European transactions related to the Nord Stream pipeline, already halted since the previous year. The EU also aims to blacklist 77 oil tankers involved in transporting Russian oil beyond the previously set cap and fully exclude 22 additional Russian banks from the European financial system. These measures aim to further restrict Russia’s access to dual-use technologies and limit its financial capabilities.

The debate within the EU remains intense and complex, and the final stance on the Russian oil price cap could represent a significant turning point in European sanctions policy. Oil markets, attentive to each announcement, await further clarification on upcoming decisions.

The flow of crude between the Hamada field and the Zawiya refinery has resumed after emergency repairs, illustrating the mounting pressure on Libya’s ageing pipeline network that threatens the stability of domestic supply.
Libreville is intensifying the promotion of deep-water blocks, still seventy-two % unexplored, to offset the two hundred thousand barrels-per-day production drop recorded last year, according to GlobalData.
The African Export-Import Bank extends the Nigerian oil company’s facility, providing room to accelerate drilling and modernisation by 2029 as international lenders scale back hydrocarbon exposure.
Petronas begins a three-well exploratory drilling campaign offshore Suriname, deploying a Noble rig after securing an environmental permit and closely collaborating with state-owned company Staatsolie.
Swiss commodities trader Glencore has initiated discussions with the British government regarding its supply contract with the Lindsey refinery, placed under insolvency this week, threatening hundreds of jobs and the UK's energy security.
Facing an under-equipped downstream sector, Mauritania partners with Sonatrach to create a joint venture aiming to structure petroleum products distribution and reduce import dependency, without yet disclosing specific investments.
Dalinar Energy, a subsidiary of Gold Reserve, receives official recommendation from a US court to acquire PDV Holdings, the parent company of refiner Citgo Petroleum, with a $7.38bn bid, despite a higher competing offer from Vitol.
Oil companies may reduce their exploration and production budgets in 2025, driven by geopolitical tensions and financial caution, according to a new report by U.S. banking group JP Morgan.
Commercial oil inventories in the United States rose unexpectedly last week, mainly driven by a sharp decline in exports and a significant increase in imports, according to the US Energy Information Administration.
TotalEnergies acquires a 25% stake in Block 53 offshore Suriname, joining APA and Petronas after an agreement with Moeve, thereby consolidating its expansion strategy in the region.
British company Prax Group has filed for insolvency, putting hundreds of jobs at its Lindsey oil site at risk, according to Sky News.
Orlen announces the definitive halt of its Russian oil purchases for the Czech Republic, marking the end of deliveries by Rosneft following the contract expiry, amid evolving logistics and diversification of regional supply sources.
Equinor and Shell launch Adura, a new joint venture consolidating their main offshore assets in the United Kingdom, aiming to secure energy supply with an expected production of over 140,000 barrels of oil equivalent per day.
Equinor announces a new oil discovery estimated at between 9 and 15 mn barrels at the Johan Castberg field in the Barents Sea, strengthening the reserve potential in Norway's northern region.
Sierra Leone relaunches an ambitious offshore exploration campaign, using a 3D seismic survey to evaluate up to 60 potential oil blocks before opening a new licensing round as early as next October.
Faced with recurrent shortages, Zambia is reorganising its fuel supply chain, notably issuing licences for operating new tanker trucks and service stations to enhance national energy security and reduce external dependence.
The closure of the Grangemouth refinery has triggered a record increase in UK oil inventories, highlighting growing dependence on imports and an expanding deficit in domestic refining capacity.
Mexco Energy Corporation reports an annual net profit of $1.71mn, up 27%, driven by increased hydrocarbon production despite persistently weak natural gas prices in the Permian Basin.
S&P Global Ratings lowers Ecopetrol's global rating to BB following Colombia's sovereign downgrade, while Moody’s Investors Service confirms the group's Ba1 rating with a stable outlook.
Shell group publicly clarifies it is neither considering discussions nor approaches for a potential takeover of its British rival BP, putting an end to recent media speculation about a possible merger between the two oil giants.