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(Bloomberg) — The European Union agreed to preserve a $44.10 price cap on Russian oil until July 23, according to an EU diplomat, as officials struggle to reach a broader sanctions deal.
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The price cap was set to rise in line with elevated global rates after Wednesday, which would have weakened a key tool allies use to suppress Moscow’s oil revenues.
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The one-week extension gives officials more time to reach an agreement on its 21st Russia sanctions package, which includes a more-permanent freeze on the oil price cap.
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The sanctions package has faced numerous delays as officials tangle over restrictions on Russia’s liquefied natural gas sales and measures regarding Austria’s Raiffeisen Bank International AG.
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The EU decided last year to let its Russian oil price cap float, setting it every six months at 15% below the average market rate for Russian Urals crude.
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The idea was to ensure that the ceiling remained low after a $60 cap failed to sufficiently stem the Kremlin’s fuel revenue. But with the Iran war sending global fuel prices soaring, the EU’s ceiling has been in line to jump as well, potentially giving the Kremlin a much-needed cash influx.
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The latest sanctions package is meant to further restrict Russia’s energy revenue, notably targeting LNG sales. It included a ban on EU firms transferring Russian LNG to other countries, as well as restrictions on selling LNG tankers to Russia.
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But officials have been unable to reach a compromise on those measures, despite aiming to have an agreement earlier this week.
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