Poland approves ceiling on oil prices from Russia at $60 per barrel

REUTERS previously wrote that Poland was in favor of limiting prices for Russian oilat $30 per barrel, and Greece at $70. Poland's ambassador to the EU confirmed that the country had agreed to a limit of $60 per barrel.

Poland has agreed to support the EU plan to cap oil prices from RUSSIA at $60 per barrel with a price review mechanism, Reuters reports citing a statement by Poland's permanent representative to the EU, Andrzej Sadosz.

The diplomat noted that Warsaw for a long time refrained from approving the deal in order to study the price adjustment mechanism. According to him, the final mechanism will allow keeping the marginal price at least 5% below the market price.

Now the EU can start the process of approving the document and obtain formal written consent to the price ceiling from all 27 members of the European Union. it is expected that the final introduction of the mechanism will be announced on Sunday, December 4, Sadosh added.

The Czech Representation in the EU Council confirmed that the permanent representatives of the member states of the Union have reached an agreement on the oil price limit, according to the diplomatic mission's Twitter page. The permanent mission noted that the decision will come into force after publication in the EU journal, but did not specify at what level the ceiling was set.

According to the Russian Ministry of Finance, the average price of the Russian EXPORT grade of Urals oil in November was $66.47 per barrel. At the same time, BLOOMBERG reported on November 28 that the price of Urals dropped below $52 per barrel.

In addition, according to the agency, the average freight rate of a ship for the supply of Russian oil from the Baltic Sea to India after the introduction of the price ceiling may increase from $9-11.5 million to $15 million ($20 per barrel). Brokers attribute this to the fact that some of the largest owners of tankers in Greece will stop transporting raw materials from Russia.

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The G7 countries agreed to introduce a price ceiling for Russian oil in early September. Later, the EU imposed an eighth package of sanctions against Russia, also including a price cap. It is expected that it will be used from December 5 for oil and from February 5, 2023 for oil products.

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The discussion in the EU of limit prices for Russian oil has been going on since November, but the countries of the bloc could not agree on them for a long time. So, Poland, according to Reuters, was in favor of a limit of $30, and Greece demanded a ceiling of no more than $70, Politico wrote.

Bloomberg also wrote that Warsaw insists on sanctions against the northern branch of the Druzhba oil pipeline (goes through the territory of Belarus) in order to obtain legal grounds for terminating existing contracts with Russia without penalties.

The US Treasury announced on December 1 that the level of oil price caps could be reviewed regularly. “We are not going to do this every week, because we want to ensure a certain stability in the market and prevent volatility. But we would be open to returning to this issue twice a month, ”said Wally Adeyemo, deputy HEAD of the department.

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Russian President Vladimir Putin has indicated that Moscow will not supply energy to countries that make political decisions that contradict the terms of the contracts. His press secretary, Dmitry Peskov, said that the Russian authorities were following discussions on the issue of an oil price cap, but noted that Russia intends to "be guided solely by its own interests."