Day 275: EU Struggles to Agree Russian Oil Price Cap; Deadly Strikes in Kherson
Facts
- Negotiations entered their third day on Friday, as EU countries remained divided over what level at which to cap the prices of Russian oil exports — an initiative aimed at limiting the financial resources available to Moscow used to fight the war in Ukraine.
- The G7 proposed a cap of $65-$70 per barrel — close to current market rates — but countries such as Poland, Lithuania and Estonia argue that rate would make oil too profitable for Russia, as production costs are roughly $20 per barrel. Others including Germany, Austria, Denmark and the Netherlands believe that going any lower could make gas supplies scarce and lead to a spike in prices from elsewhere.
- Reports suggest that the issue has created a political crisis for the European Commission, with considerable anger being expressed by diplomats of various nations. "Right now, nobody’s happy," one EU diplomat told Politico: "We’re not progressing... [and we're] back to where we were at the beginning."
- Meanwhile, a separate report in Politico quoted a number of EU officials who claim they are increasingly displeased with the US and the Biden administration, and accuse them of profiting from the Ukraine war while Europe struggles. Josep Borrell, the EU's chief diplomat, said: "Americans — our friends — take decisions which have an economic impact on us."
- On the ground, Russia launched widespread attacks in recently recaptured territories on the west bank of the Dnipro River in Kherson on Thursday. Local officials said ten civilians were killed and a further 54 were injured.
- Russian attacks were also recorded in Zaporizhzhia, Dnipropetrovsk and Kharkiv, where one civilian was reported injured. Meanwhile, the death toll from Wednesday's strikes on the region of Kyiv has risen to 7, local authorities said.
Sources: MSN, FX Street, Politico, and Ukrinform.
Narratives
- Pro-establishment narrative, as provided by Associated Press. A cap on Russia's oil exports will further strain the resources available to Moscow for fighting its war in Ukraine, while alleviating price instability if Russian oil is taken off the market — it must be implemented.
- Establishment-critical narrative, as provided by FX Street. With countries such as China, India and others unlikely to go along with the EU's proposals, it's highly unlikely that they will be successfully implemented or work, even if support for the measures can be consolidated. A price cap is a ridiculous idea.
- Pro-Russia narrative, as provided by Moscow Times. A cap on the price of Russian oil goes against the principles of international trade and would have grave consequences for the global energy market.