Europe moves to prevent Russia from benefiting from rising oil prices

Bloomberg News reported on Sunday, citing sources, that the European Union is considering a temporary suspension of the price cap imposed on Russian oil, amid the escalating crisis in the Middle East.

Last year, the European Union adopted a flexible mechanism based on automatically updating this cap every six months, so that it remains 15% below the average market price of Russia’s Urals crude. The current limit stands at $44.10 per barrel, and is due to be reviewed later in the summer.

Under this cap, European companies are prohibited from providing essential services such as insurance or transport for any oil shipments sold above the specified limit.

At the same time, oil prices have risen markedly as a result of the war with Iran and tensions linked to the effective closure of the Strait of Hormuz. Accordingly, the July review could have raised the price to around $65 per barrel, above the previous $60 cap adopted by the Group of Seven.