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European Union diplomats failed to agree Thursday on the final details of a policy to help limit Russia’s oil revenues, following a setback the day before by efforts by the United States and Ukraine’s allies to cut the flow of money for to curb the Russian invasion of Ukraine. .

Officials have failed to agree on a top price that traders, shippers and other companies in the supply chain could pay for Russian oil sold outside the bloc. The policy must be in place before an EU embargo on Russian oil imports takes effect on December 5.

The embargo only applies in the block of 27 countries. So to further limit Russia’s financial gains, the group wants to put a cap on the amount buyers outside the region pay for Russian oil. That crude oil could only be sold outside Europe and would have to be below the agreed price. Russia has repeatedly said it will ignore the policy and analysts have said it will be difficult to enforce.

The plans to curb Russian oil prices “contrary to market principles and are likely to have serious consequences for the global energy market,” Russian President Vladimir Putin said on Thursday. Kremlin account of a conversation he had with the Prime Minister of Iraq.

The United States and Europe have imposed sanctions on Russia since the start of the war, cutting the country off from financial markets and making oil, its largest export, essential to financing the war in Ukraine. At stake is a complicated and fraught effort by Ukraine’s allies to limit the Kremlin’s revenue from oil exports while avoiding a fuel shortage, which would drive up prices and trigger a cost-of-living crisis. the whole world would get worse.

The EU ambassadors have been asked to set a price of $65 to $70 per barrel and be flexible in enforcing the limit.

The measure of the price of Russian oil, known as the Ural blend, has traded between $60 and $100 a barrel for the past three years. In the past three months, the price traded from $65 to $75 a barrel.

Despite the delays in setting a price, countries in the Group of 7 have been trying to prepare energy market participants for how the price cap will work. It will place the burden of enforcing and monitoring the policy on the companies that help sell the oil. Those global shipping and insurance companies are mostly based in Europe. According to maritime records, most of the tankers carrying Russian oil are in Greek hands. And London is home to the world’s largest marine insurance companies.

Some EU diplomats, especially those from Poland and Ukraine’s other staunch allies, said the price range proposed by the G7 was too high and the ceiling should be set much lower to hurt Russia’s revenues, according to several EU diplomats who directly involved in or informed about the discussions. They asked not to be named because they were not authorized to speak publicly.

Greece, Cyprus and Malta, which have a strong interest in the policy due to their large maritime industries, called for an even higher ceiling. That would have pushed the price above current trading levels, easing pressure on the companies based there. Some even sought compensation for possible loss of income for their maritime business.

France, Germany and Italy, the three EU countries that are members of the Group of 7 industrialized countries driving Russia’s oil price cap, argued in favor of the presented price range and softer enforcement mechanisms, advocating the US position that they were necessary to achieve a supply crisis.

The European Union embargo on Russian oil that takes effect December 5 also includes a ban on European services from shipping, financing or insuring Russian oil shipments to destinations outside the bloc, a measure that would disable the infrastructure that carries Russian oil. to buyers around the world.

However, the price cap would allow these European shipping companies to ignore the embargo as long as they ship Russian crude oil outside the bloc at a price below the cap. Its enforcement would be left to the companies. Otherwise, they would be held legally responsible for violating sanctions.

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