German sources warn of setting a possible ceiling for Russian oil prices, which is far from imminent

The industrial facilities of PCK Oil Raffinerie are photographed in Schwedt/Oder. The company receives crude oil from Russia via Germany’s “Friendship” pipeline on May 9, 2022. REUTERS / Hannibal Hanschke

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BRUSSELS (Reuters) – Germany and other EU governments expressed caution at a closed-door meeting over setting a cap on Russian oil prices, EU officials said, a day after the Group of Seven economic nations agreed to start urgent work on the issue. Reuters on Thursday.

On Tuesday, G7 leaders agreed to explore “the feasibility of imposing temporary import price controls” on Russian fossil fuels, including oil, and instructed ministers to urgently evaluate the proposal. Read more

A day later, Germany’s envoy to the European Union told his counterparts in a restricted meeting that the world should be “realistic” about the proposal, which he said was added to the G7 statement after “intense pressure” from Washington, according to an official who attended the meeting.

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The envoy also said that an agreement on whether to implement the caps is not expected to come any time soon, according to the source.

Hungary and Belgium also raised concerns at the meeting over the G7 statement on sanctions, the official said, as Hungary explicitly backed Berlin’s warnings about capping oil prices.

A second EU official familiar with the talks confirmed that Germany and others had been cautious about setting a cap on oil prices.

A spokesman for Germany’s embassy in the European Union declined to comment.

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“The success of this plan depends on international cooperation,” a German government official said on Thursday.

Stefano Sanino, the EU’s diplomatic chief, said on Thursday that the price cap would only be effective if it was applied globally, and therefore an agreement would be needed across the G20 countries, not just the G7.

“You have to make sure there is no distortion in the trade, so the only thing that happens is that the oil basically goes to other places with other carriers and is insured by other companies — so the price stays the same,” Sannino said. EU-UK Forum Conference.

Under EU sanctions that will take effect in December, insurance and other financial services essential to Russian oil shipments around the world will be blocked.

Critics of this fear that it could lead to higher global oil prices due to the main role that EU companies play in securing shipping, which is beneficial for Moscow. Read more

If agreed, capping would effectively enable companies to trade Russian oil, rather than face a complete ban.

However, officials said the EU sanctions on Russian oil, which took weeks to agree, will have to be amended and reopening the debate on that measure could be controversial.

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(Reporting) by Francesco Guaraccio and fraguarascio Reporting by John Chalmers; Editing by David Evans

Our criteria: Thomson Reuters Trust Principles.

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