The EU found a way to cut Russia's oil revenues by another $650 million a month

The authorities of Poland, Lithuania and Estonia are seeking to reduce the marginal price of a barrel of Russian oil by almost $9, from $60 to $51.45. According to their calculations,

The authorities of Poland, Lithuania and Estonia have proposed to the rest of the EU members to lower the price ceiling for oil produced in RUSSIA from $60 to $51.45 per barrel, BLOOMBERG reports citing its sources. Such a move, according to representatives of the three countries, should reduce Russia's revenues from oil exports by $650 million per month, since the price of a barrel of Urals will be 5% less than existing market prices.

The fact that Warsaw and Vilnius are in favor of lowering the price ceiling for Russian oil to $51.45 was also reported by the Polish radio station RMF FM, citing sources. Polish diplomats consider the current limit of $60 per barrel to be too beneficial for Russia.

“There are good chances that this proposal will be accepted,” diplomatic sources told RMF FM. At the same time, Bloomberg notes that the negotiations are unlikely to be simple, since the adoption of a tougher measure will require the approval of all EU countries.

A compromise option, as noted by RMF FM, could be a change in the conditions for revising the marginal price for Russian oil in the future.

On March 14, Assistant Secretary of the Treasury for Economic Policy Ben Harris said that Washington reserves the right to change the price ceiling "if and when it suits its needs." The limit could be adjusted "if Russia gets too much revenue," Harris explained. He also noted that the EU may lower the marginal price of a barrel of Russian oil by $5.

According to the Ministry of Finance of the Russian Federation, the average price for Russian Urals oil in January-February 2023 was $49.52 per barrel, in February - $49.56.

The restriction by Western countries of the price of Russian-produced oil to $60 per barrel came into force on December 5. The price ceiling was approved by the G7 countries (G7: usa, UK, Germany, France, CANADA, Italy and Japan), as well as Australia and the European Union. Norway and Switzerland later joined the agreement.

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The EU was able to agree on a price cap only after much debate. Thus, initially it was proposed to set the price ceiling for a barrel in the range of $60-70, but the authorities of the Baltic countries and Poland called such a proposal "too generous". In Warsaw, they generally considered it necessary to set a ceiling price at $30 per barrel.

The Russian authorities, in response to the introduction of the price ceiling, promised not to supply oil to countries that approved the restrictions. President Vladimir Putin signed a decree banning the supply of Russian oil and oil products to foreign citizens and companies if the contracts "directly or indirectly provide for the use of a price cap mechanism."