All the keys to the European Union’s veto on Russian oil: how much crude does it affect? What is the cap price?



How much crude does the measure affect?

It affects two thirds of the daily barrels that leave Russia.

  • This is the amount that is transported by sea to the countries of the European Union.
  • The remaining third travels through pipelines.

This measure also affects European insurers. They will not be able to put insurance policies on the ships that transport Russian oil purchased above the established price.

Who has implemented the measure?

The measure had been on the table for some time and ended up being approved this weekend. It has taken many meetings for the European Union, the G7 powers and Australia to reach an agreement.

  • These powers had been pursuing the measure for months at the proposal of the United States Secretary of the Treasury, Janet Yellen.

Why only a part of the crude that we import?

Despite widespread support from Union members, not all countries were in favour.

  • Hungary, an ally of Russia, managed to leave aside the veto of the rude that comes through the pipelines.
  • Other countries such as Greece, Cyprus and Malta, whose ships transport a large part of Russian oil to all parts of the world, advocated a limit that would not endanger the business of their shipping companies.
  • On the contrary, Poland, supported by the Baltic countries, demanded a much lower ceiling.

For note…

Although the measure enters into force today…

  • There is a 45-day grace period that will allow European operators to offer services as long as the Kurdo has been loaded before January 5 and reaches its destination before January 19.
  • In addition, a review mechanism every two months will allow the 60 dollars to be adjusted downward if the price of oil in international markets falls. The goal is for the veto to always be at least 5% below the market price.

What is the OBJETIVE?

Attacking one of the Kremlin’s main sources of income to finance its war in Ukraine. Russia’s state revenue from oil represents 37% of the budget, according to community sources.

However, Kremlin spokesman Dimitri Peskov says the country has enough reserves to continue its military campaign in Ukraine.

And meanwhile…

Although the European embargo affects 90% of the oil that Russia sold before the war, the Kremlin does not seem very concerned.

  • President Vladimir Putin has threatened to stop supplying oil to countries that support the oil price cap.
  • In addition, Russia assures that it will not lack buyers and will redirect its exports to Asia.

Source: Lasexta

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