The European Union may have finally agreed to set the price cap on Russian crude oil at $60 per barrel. Quoting an EU diplomat yesterday, Reuters said however that deal must first be agreed to by majority of members, including Poland.

Poland, Estonia, and Lithuania are noted to have all voiced their opinion that the price cap on Russian crude oil insured and shipped by Western companies should be set at far lower rates, $20-$30 per barrel
The figures look very much like Russia’s production level costs, just as they were dismissed as having very little chance of being supported by other EU members.

Meanwhile, the United States yesterday warned the EU that the $52 cited recently for Urals crude oil may not reflect the overall level at which Russian oil has been trading.

Also Read: U.S., Allies May Cap Russian Oil At $60

 An unnamed U.S. official has said that Urals has been trading at a $17-$23 discount to crude, which would make it higher than the $52 cited by some media.

The EU has proposed setting the target $8 above that cited figure.
The EU’s current proposal is set far above the original ask from Poland, Estonia, and Lithuania. Should one or more of them disagree, the embargo on Russian maritime imports will go into effect as of next Monday, on December 5.

Under the usual market scenario, an embargo would naturally lift the price of crude oil for European buyers. But the price cap would serve to mitigate this price hike—which is why the United States has thrown its support towards the measure, and why it is cautioning the EU not to set the cap so low that they cannot gain consensus. The other issue at play is whether Russia will continue to ship its crude oil if it is price capped—and if so, how high crude oil prices would rise as a result.

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