Russian flagship crude oil dipped again on Friday, serving as a reminder of the challenges facing European Union diplomats haggling over a price level at which to cap Moscow’s exports.
The country’s key Urals grade fell to $51.96 a barrel at the Baltic Sea port of Primorsk, according to data provided by Argus Media Ltd., a publisher of physical commodity prices. It fell by a similar amount, and to a similar level, from Novorossiysk in the Black Sea.
Late last week, EU diplomats were discussing a cap on Russian oil sales in the $65-to-$70-a barrel range. The talks may resume Monday. Any buyer that pays more than the cap wouldn’t be allowed to use European ships or industry-standard European insurance.
But the challenge is that some EU countries including Poland are pushing for a lower cap level than $65-to-$70 in order to punish the Kremlin for its war in Ukraine. By contrast Greece, the world’s top oil-tanker owning nation, would rather impose a high cap. The lower the spot price, the more pressure it creates for a lower cap.
The diplomats need to find unanimity and the figure they settle upon will then need to be adopted by the Group of Seven industrialized nations. A European imports and blanket insurance ban are due to enter force, creating an urgency to agree a cap and avert a supply shock.
The higher the cap level, the easier it will be for Russia and its customers to hire tankers with industry standard insurance.
There is significant uncertainty about Russian oil prices because trading of the nation’s cargoes has become less transparent since the war. On Thursday, Platts, a price-publisher that’s part of S&P Global Inc., also assessed the price of Urals at the Russian port of Primorsk at around $52, according to people familiar with the matter.
The Argus price is used by Russia’s finance ministry to calculate export duties.
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