EU diplomats failed on Monday to agree on a set price cap for Russian oil as a December 5 deadline for the policy is approaching, Reuters reported.
The main hindrance to reaching a deal was Poland, which is demanding a much lower price cap than what the G7 has requested. The EU was asked to put the price cap between $65 to $70 per barrel, but Poland wants it slashed down to $30, a similar figure to what Ukrainian President Volodymyr Zelensky would like to see.
“The Poles are completely uncompromising on the price, without suggesting an acceptable alternative,” an EU diplomat told Reuters. “Clearly there is growing annoyance with the Polish position.”
The idea of the price cap, which has been pushed by US Treasury Secretary Janet Yellen, is to keep Russian oil on the market to limit an increase in global prices while keeping Moscow’s profits down. December 5 is when the EU’s oil embargo on Russia begins, although there are exemptions for land-locked countries, including Hungary.
The EU ban also includes a prohibition on providing insurance for Russian oil shipments. The price cap would allow such services to be provided as long as the oil is being sold at a price set by the West.
But the plan’s major flaw is that it requires Moscow’s cooperation, and Russia has repeatedly stated that it will cut off any country that tries to implement the price cap. If Moscow retaliates by cutting oil production, it will send global prices skyrocketing and have the reverse effect of what Yellen says the plan can achieve.
Polish diplomats told Reuters that if a price isn’t agreed upon by December 5, the EU sanctions on Russian oil will take effect without the price cap exemption.