Poland and the Baltic states have also secured a mechanism that would allow for revisions of the price every two months and a provision to ensure any resetting of the cap should leave it at least 5% below average market rates.
EU has been walking a tightrope to get the cap right. Cap too high would not be sufficiently painful for Russia and cap too low could send the global oil prices higher, further increasing the inflation.
Estonia was aiming to set the cap price at much lower level, somewhere between $30-40 per barrel. However, Estonia still views the $60 cap as a win. “Every dollar counts. Every dollar that was negotiated down means an estimated $2 billion dollars less income for Russia,” Estonian Prime Minister Kaja Kallas said in a statement. “The initial proposal was to set the price at $65. I thank partners who agreed to come down to $60 -- this means $10 billion less for Russia to finance its genocidal war against Ukrainians.”
The US first proposed the cap as there were concerns that impending EU sanctions would cut off Russian supply and cause a massive spike in global oil prices. The cap provides an offramp, allowing buyers adhering to it to access the insurance and shipping services that EU sanctions would otherwise prohibit.
Most G-7 nations will stop importing Russian crude by the end of this year. An EU ban on other refined petroleum products originating in Russia is due next February, alongside a cap on those goods.
