EU members agree on $60 price cap for Russian oil by sea

EU member countries on Friday agreed on a $60 per barrel price cap for Russian crude oil exports transported by sea.

"Ambassadors have just reached an agreement on price cap for Russian seaborne oil. Written procedure follows, decision will enter into force on publication in the Official Journal. EU stays united and #StandWithUkraine," the Czech Presidency of the Council of the European Union announced on Twitter.

The decision puts an end to days of tough negotiations among representatives of the 27-member bloc.

While Poland, Estonia, and Lithuania sought a lower price, Greece, Malta, and the Greek Cypriot administration-all of which earn money from transporting Russian oil-had pushed for a higher price.

The price cap aims to hit Moscow's revenues from crude oil exports and sales as Russia's war on Ukraine approaches 2023, its second calendar year.

In addition, the agreement will ensure the Russian price cap is set at least 5% below the market price of crude oil, while it will be reviewed every two months.

As part of the deal, G7 countries will ban their shipping companies from facilitating Russian oil shipments if they are sold above the price cap of $60 a barrel.

The agreement will go into effect on Monday, when the EU will begin cutting off crude supplies from Russia by sea.

Russia is the world's second-biggest crude oil exporter after Saudi Arabia, meeting around 10% of global crude demand.

European Commission President Ursula von der Leyen said the agreement, coordinated with G7 and others, will reduce Russia's revenues significantly, and wrote on Twitter: "It will help us stabilise global energy prices, benefitting emerging economies around the world."

"The European Union and other major G7 partners will have a full import ban on Russia seaborn oil as of 5th of December. But we need to ensure that emerging and developing countries continue to have access to some Russian crude oil at limited prices," she told in a video release on Twitter.

The president said the price cap will have three objectives -- strengthening effects of the EU's sanctions on Russia, further diminish Russia's revenues, and stabilize global energy markets since it allows some Russian seaborn oil to be traded, brokered and transported by EU operators to third countries as long as it is sold below the price cap.

"So, this price cap will benefit directly emerging and developing economies, and it will be adjustable over time so that we can react to market developments," she explained.