Once again, Russian oil prices have become a hot spot for confrontation between the European Union (EU) and Moscow. The latest move from the EU to cut the price ceiling for Russian seaborne crude oil from $60 to $45/barrel not only sparked a wave of backlash from the Kremlin but also raised analysts' concerns about a new wave of fluctuations in the global oil and gas market.
Such an action would certainly not contribute to the stability of the international energy and oil market, Kremlin spokesman Dmitry Peskov said on June 11, after Western media reported on the 18th round of sanctions that the EU is preparing to pass.
According to published information, the European Commission is promoting the 18th package of Russian sanctions to increase economic pressure on Moscow in the context of the conflict in Ukraine showing no signs of cooling down.
The expected measures include: lowering the price of Russian oil from $60 to $45/barrel; Banning the transportation and use of the Nord Stream gas pipeline in the future; Limiting imports of refined products from Russian oil; Putting 77 more ships on the "blacklist" with the accusation of helping Russia evade sanctions.
The draft of the 18th package of sanctions requires the consent of all 27 EU member states to be approved - which is not simple in the context of many countries still relying significantly on imported energy.
Dmitry Peskov said Russia is closely monitoring all moves from the EU and will take appropriate retaliatory measures if the oil price ceiling is adjusted.
We have had useful experience in mitigating the consequences of previous illegal sanctions, Peskov said, adding that Russia will proactively protect national interests in any scenario.
Since the end of 2022, the West has imposed a price cap of $60/barrel on Russian crude oil to limit financial revenue for war. This regulation comes with a ban on Western transport and insurance companies participating in shipments exceeding the ceiling. However, according to experts, the practical effectiveness of this measure is still controversial.
The price cap to $45/barrel - if implemented - could prompt Russia to react strongly, as it has said it will stop supplying to any country that complies with the price cap.
A recent report from the International Energy Agency (IEA) warned that any supply shock from major producers like Russia could have a domino effect on global prices and inflation.
Even within the EU, the proposal to lower the ceiling for Russian oil prices also faced Implied opposition from some members worried about the opposite impact. Countries such as Hungary, Slovakia or Bulgaria - which still depend on Russian oil - may continue to request exemptions or delay implementation.
