Kallas on Russian oil price cap: Not a matter of if, but how high

Prime Minister Kaja Kallas (Reform).
Prime Minister Kaja Kallas (Reform). Source: Priit Mürk/ERR

Estonia supports imposing a cap on the price of Russian oil in any case, but is nonetheless attempting to bring down the price range currently being discussed in the EU, Prime Minister Kaja Kallas (Reform) said Friday.

"There's no question on whether there will be a price cap on oil, but rather how to achieve the right price," Kallas told ERR on Friday. "The issue is that if according to our information, Russia generates revenue at prices above $30 a barrel which it can use to fund its aggression in Ukraine, then it shouldn't be that way."

At the same time, she acknowledged that as the current proposed price cap was submitted by the European Commission based on the G7's proposal and there are also member states who would like to raise it, a sharp drop in the price cap instead may not be realistic.

Negotiations have reached the highest political level. Kallas said that she still has a call ahead Friday with U.S. Secretary of the Janet Yellen, and according to ERR's information, the Estonian head of government has also been in close contact with European Commission President Ursula von der Leyen and Polish Prime Minister Mateusz Morawiecki as well.

Ambassadors from member states are on day  three of talks Friday regarding a proposal by the G7 to introduce a price cap of $60-70 per barrel on Russian oil. The Baltic countries and Poland, however, would like to see that price cap significantly further reduced, as allegedly the cost price of oil supplied by Russia is approximately $30 per barrel, meaning that any further revenue earned can be used by Moscow to continue waging war.

Greece, Cyprus and Malta, however, would like the price cap raised even higher than that proposed by the G7, as otherwise those three countries, all of which have major shipping sectors, would lose out on their own income as well.

Estonia is allegedly serving as spokesperson for those member states who want to further bring down the price cap.

Minister of Foreign Affairs Urmas Reinsalu (Isamaa) made it clear Thursday that Estonia may exercise its right to veto the issue, which requires unanimity.

"That is the question in critical moments in which all member states have an equal vote in such a decision-making format," he said, referring to EU rules requiring unanimity on foreign policy and tax issues, meaning that all member states have veto rights.

Kallas declined to respond directly when asked by ERR Friday about the potential use of Estonia's veto, noting that Estonia always prefers to reach a consensus and is seeking a compromise.

"But this is nonetheless a very important issue for us," she continued. "Oil revenues, which are Russia's source of funding for the war, need to be shut off."

According to the Estonian prime minister, once the price cap has been set on Russian oil, it will be necessary to look at how it starts to work and then adjust the price cap in the future accordingly.


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Editor: Aili Vahtla

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