Czech Republic: EU Ambassadors Agree to Russian Oil Price Cap

By Scott Kanowsky 

Investing.com -- European Union ambassadors have reached a "political agreement" to impose a price cap on Russian oil in a bid to limit energy revenues going into Moscow's coffers and respond to the Kremlin's contested annexation of regions in Ukraine.

The Czech Republic - currently the holder of the revolving presidency of the 27-member bloc - announced that officials signed off on a package of measures that include a ban on the seaborne transport to third countries outside the EU of Russian oil priced above the new ceiling. The announcement did not specify the exact limit that would be imposed by the cap. 

The proposal - which also includes prohibitions on other Russian imports and exports, as well as moves designed to make avoiding the sanctions tougher - must still receive final approval from EU lawmakers. If confirmed, the restrictions would then go into effect once they are published in the EU's Official Journal, with media reports suggesting that this could happen later this week.

In a tweet, Czech officials called this eighth round of actions taken against the Kremlin a "strong response" to president Vladimir Putin's annexation of four regions in eastern Ukraine. That followed a series of votes to join the Russian Federation held in the areas late last month, which the EU and its western allies have decried as a "sham."

EU Commission president Ursula von der Leyen said the sanctions aim to make the Kremlin "pay" for its ongoing invasion of Ukraine.

According to reports, the price cap in particular is seen by the EU as a mechanism to force Russia to accept cheaper bids for oil exports from large importers like China or India. This, in turn, may dent key energy revenues flowing back into Russia, which has been accused of using this cash to fund the war effort in Ukraine.