Estonian politicians sought lower than $60 per barrel Russian oil price cap

The Kremlin in Moscow, Russia.
The Kremlin in Moscow, Russia. Source: Pixabay

Bloomberg reported on Friday that EU Member States agreed on a $60 per barrel cap for Russian oil.

The cap will be enforced through transport and services denials. Starting from Monday, December 5, it will no longer be allowed to transport Russian oil for which more than $60 per barrel has been paid to third countries. European ports must also not offer services to vessels transporting Russian oil for which more was paid.

Russia is already selling its crude oil at a discount, with Brent crude fetching $87 per barrel and Russia's Urals $64 on Friday.

Bloomberg wrote that Western countries want Russia to continue supplying the world market with oil, which is why a lower cap was not ordered.

The EU agreed to revisit the price cap every two months.

Estonian politicians in favor of a lower ceiling

Prime Minister Kaja Kallas (Reform) said that the Commission's original proposal was to cap the price at $65 per barrel, while Estonia convinced its partners to come down. "Every dollar off that price costs Russia roughly $2 billion. The fact that we managed to bring the price down by $5 means that the Russian war machine will lose out on $10 billion," the PM commented.

Both Kallas and Minister of Foreign Affairs Urmas Reinsalu (Isamaa) believe the price cap could be lower still. "Our experts conclude that a price of $30-40 would really hurt Russia. But what we achieved today was the best possible compromise at this time. I'm grateful to our partners who allowed themselves to be convinced and agreed to what we proposed," Kallas said.

"Our goal is to take away Russia's means of financing its aggressive military action against the Ukrainian state, people and independence. The price cap laid down today is still too high and fails to fully achieve that goal, while I remain hopeful that we may succeed in bringing it down in the future. What matters is that we clearly phrased that the price ceiling can come down," Reinsalu said.

Former Foreign Minister Eva-Maria Liimets (Center) said that because the compromise achieved a lower price than the initial G7 proposal of $65-70 per barrel, there is reason to be satisfied.

"It is important that we have an agreement and the price cap will be laid down. We will soon see its effect on the world market," Liimets said, adding that should the decision cause oil prices to grow, Estonia should consider steps to help people cope with rising prices.

Eesti 200 leader Lauri Hussar and chairman of the Social Democratic Party (SDE) Lauri Läänemets said that a $60 ceiling is not satisfactory, even though Läänemets added it is better than nothing.

"In the end, the disappointment is not in Estonia's PM but rather the fact that there was not enough European unity to make that decision in terms of energy prices. But I understand that it constitutes an initial step. The next one could be bigger, and I hope we will make progress.

Hussar also said that the lower the price cap, the better. "The European Union must work toward untying itself from Russian energy sources. It is the most effective way to stop the fighting in Ukraine," the party leader remarked.

Head of the opposition Conservative People's Party (EKRE) Martin Helme's opinion diverged from the others when he said that the oil price cap is little else than political posturing that will do nothing to weaken the Russian economy.

"Russia has largely diverted its oil and gas to Asian countries that will not be joining these sanctions. So, whether the cap is $70, $60 or $40 is so much kabuki theater. It may affect the price of oil indirectly, while the global state of affairs remains a much bigger factor," he said.

Helme said that sanctions that most of the world will not be joining are toothless, and that countries should rather concentrate on developing independent defensive capacity.


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Editor: Karl Kivil, Johannes Voltri, Merili Nael, Marcus Turovski

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