Time to review oil price cap on Russia, says Ukraine foreign minister

“Ukraine is confident it's time to review the oil price cap given the current market price on Urals is lower than $50/bbl,” tweeted Dmytro Kuleba, Ukraine’s Minister of Foreign Affairs.

PHOTO: Getty Images

Ukraine has called for the price cap on Russian oil sales to be revised due to the low price of Russia’s flagship Urals crude amid the West versus Russia energy war. As of yesterday, Russian Urals crude oil was near $55/bbl after falling as low as $38/bbl last Friday.

Kuleba added that the price cap review should ensure a “drastic reduction” in Russia's income for financing “war, mass atrocities, and destabilisation” in Europe and elsewhere.

In December last year, the G7 nations, including the European Union and Australia, capped the price of sea-borne Russian crude oil imports at $60/bbl and decided to impose further sanctions and price caps on Russian refined petroleum products on 5 February.

The Kremlin retaliated by banning oil sales to nations participating in the price cap for five months beginning in February.

According to the Russian newspaper Vedomosti, Russia's oil exports and output remained undeterred by western sanctions. However, analysts predict it will cause Russia to cut its oil production by around 1 million b/d this year. This could cause a supply shortage in the oil market, further escalating the conflict.

In the meantime, some European politicians have voiced opposing opinions on the sanctions on Moscow at the World Economic Forum in Davos.

Péter Szijjarto, Hungary's foreign minister criticised the EU sanctions in an interview with CNBC, saying that the impact of sanctions was more hurtful to EU member economies than Russia's. When sanctions were first discussed, they were expected to cripple Russia's economy and stop the war. However, “Russia’s economy is not on its knees, definitely,” he said.

On the other hand, Lithuanian president Gitanas Nauseda called the sanctions “critically important,” saying that they have a slow but significant effect on the Russian economy and must continue.

By Konica Bhatt

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