BRUSSELS — European Union negotiators reached an agreement late Tuesday on capping the price of Russian oil as part of a fresh package of sanctions, several diplomats involved in the talks said.
Greece, Malta and Cyprus — maritime nations that would be most affected by the cap — received assurances that their business interests would be preserved, the diplomats said. The countries had been holding up what would be the eighth sanctions package the European Union has adopted since the Russian invasion of Ukraine because of worries that a price cap on Russian oil exported outside the bloc would affect their shipping, insurance and other industries, the diplomats said.
The sanctions package is set to go through the final approval process on Wednesday and is not expected to change substantially.
With oil prices at a high, Russia is raking in billions of dollars in revenue, even as it sells smaller quantities. The cap is intended to set the price of Russian oil lower than where it is today, but still above cost. The U.S. Treasury calculates that the cap would deprive the Kremlin of tens of billions of dollars annually.
Under the new rules, companies involved in the shipping of Russian oil — including shipowners, insurers and underwriters — would be on the hook for ensuring that the oil they are helping to transport is being sold at or below the price cap. If they are caught helping Russia sell at a higher price, they could face lawsuits in their home countries for violating sanctions.
The E.U. oil price cap is only one piece of a complex global puzzle. To make the measure effective, and cut Russian revenue, the United States, Europe and their allies would need to convince India and China, which buy substantial quantities of Russian oil, only to purchase it at the agreed upon price. Experts say that even with willing partners, the cap could be hard to implement.
Russian crude will come under an embargo in most of the European Union on Dec. 5, and petroleum products will follow in February. The price cap on shipments to non-E.U. countries has long been championed by U.S. Treasury Secretary Janet Yellen as a necessary complement to the European oil embargo.
Under the E.U. deal, Greece, Malta and Cyprus will be permitted to continue shipping Russian oil. Had they not agreed to place their companies at the forefront of applying the price cap, they would have been forbidden from shipping or insuring Russian oil cargo outside the European Union, a huge hit for major industries.
More than half of the tankers now shipping Russia’s oil are Greek-owned. And the financial services that underpin that trade — including insurance, reinsurance and letters of credit — are overwhelmingly based in the European Union and Britain.
The Group of 7 nations championed the price cap at the United States’ behest. Its member nations that do not belong to the European Union — the United States, Britain, Canada and Japan — are expected to enact laws similar to the European Union’s to enforce it.
The E.U. sanctions document foresees that the European Union, along with the G7 countries and their partners that agree to the price cap, form a committee to decide what price Russian oil should be sold at. The committee would meet regularly, and the price would change based on the market price.