EU Reportedly Set To Unveil Fresh Oil Price Cap For Russian Crude This Week At $47/Barrel

The European Union is reportedly close to agreeing on a fresh price cap for Russian crude as part of its latest package of sanctions for Moscow’s invasion of Ukraine.

Reuters reported, citing sources, that nearly all member states of the bloc have agreed to all the elements of the sanctions package, the 18th since the war began. However, only one member state still has a technical reservation on the new cap.

The report added that EU members could reach a complete agreement on Monday before a foreign ministers' meeting in Brussels the following day, where the sanctions could be formally approved. According to EU regulations, sanctions must be approved unanimously before they are implemented.

On Friday, the European Commission reportedly proposed a floating price cap on Russian oil, set at 15% below the average market price of crude oil in the previous three months. The Reuters report added that the initial price can be set at around $47 a barrel based on the average price of Russian crude for the last 22 weeks minus 15%. The price would be revised based on the average oil price every six months instead of the proposed three months.

Retail sentiment on Stocktwits about United States Oil Fund (USO) was still in the ‘extremely bearish’ territory at the time of writing.

The previous price cap, set at $60 per barrel in December 2022, has largely proved ineffective this year amid a decline in crude oil prices. The EU’s fresh sanctions come at a time when Donald Trump is also expected to make a ‘major announcement’ on Russia on Monday.

The U.S. President has approved the delivery of Patriot air defense missiles to Ukraine and has publicly revealed his frustrations with Russian President Vladimir Putin about his reluctance to participate in peace talks brokered by Washington, D.C.

Benchmark Brent crude prices were up 0.5% at $70.70 per barrel, while U.S. WTI crude prices gained by 1.1% at $69.29 per barrel at 7.42 am GMT.

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