EU agrees to buy Russian oil at $60 per barrel

Desk Report: Russia-Ukraine War Turbulent World Economy There is instability in the international oil market. Russia is selling cheap oil. Therefore, the European Union (EU) countries will buy oil at the fixed price. EU governments reached a deal on Thursday (December 1) to buy Russian offshore oil. The price of this oil per barrel is fixed at 60 USD.

From December 5, the European ban on the supply of Russian crude oil by sea will come into effect. Earlier, the Western countries reached a consensus on fixing the price of Russian oil.

The G-7, the world’s top 7 economies, proposed to buy Russian crude oil at a lower price. Their proposal was that the European Union should agree to buy oil at 65 to 70 dollars per barrel by reducing the market price of global crude oil by 5 percent.

But the agreement could be ratified in writing by all EU governments on Friday (December 2). In addition to Ukraine, the governments of Poland, Estonia and Lithuania have been saying that the price of Russian oil needs to be set much lower than $60. But Greece, Cyprus and Malta think that the price of Russian oil should be set a little higher.

An EU diplomat said Poland, which had pushed for prices to be cut as low as possible, had not confirmed as of Thursday evening whether it would support the deal at all.

European Union countries have been debating for several days over setting a price ceiling for Russian oil. Its purpose is to reduce Russia’s revenue from oil sales. It also aims to prevent a rise in global oil prices after the European Union ban on Russian crude oil came into effect on December 5.

The deal would allow Russia to continue importing crude oil using Western insurance and maritime services, provided it does not pay more per barrel than the stipulated price.

A top G7 official earlier said a deal was imminent and expressed confidence that the fixed oil price would limit Russia’s ability to wage war against Ukraine.

If this ban is implemented, the countries which buy oil from Russia including China, India will be in trouble. Because, in the case of oil transportation, most of the ship insurers are based in Europe and UK.

Source: Reuters

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