EU agrees on plan to cap Russian seaborne oil prices

Dec. 2 (UPI) -- European Union ambassadors Friday reached agreement on a plan to cap prices on Russian oil shipped by sea, according to the Czech Republic, which currently holds the EU presidency.

A Czech Republic tweet confirming the deal said: "Ambassadors have just reached an agreement on price cap of Russian seaborne oil. Written procedure follows, decision will enter into force on publication in the Official Journal."

Poland had been holding out on the deal, but agreed to the EU's $60 per barrel price cap on the Russian oil. Poland wanted a lower cap, but agreed to the EU price capping that called for a price at least 5% below the average market price.

The European Union decided in May to embargo Russian seaborne oil, but exempted Russian oil delivered via pipelines. That embargo takes effect Monday.

The G7 group of wealthy nations decided to cap Russian oil prices in September and said it was specifically designed to reduce Russian oil revenues and Russia's ability to fund its war against Ukraine.

As the EU worked toward agreement, members were divided on the price that should be set for Russian oil. Poland and the Baltic states wanted a $30 a barrel cap while Greece, Cyprus and Malta wanted a $70 cap.

According to Euronews, since western nations dominate critical oil marketing services like financing, insurance, flagging and shipping services, the price cap will work as a ban on providing those services.

Most of the big shipping companies and insurers are based in G7 countries and the oil price capping plan bans those companies from handling Russian crude oil unless it has been sold at or below the set price.

With China and India and other nations still buying Russian oil, it remains to be seen whether the EU and G7 will succeed in cutting Russian oil revenue through this price capping plan.

Those nations would still be able to violate the price cap by finding alternate means of shipping and insuring Russian oil shipments.