Officials from the United States and the European Union are having private discussions about how the EU could cut crude oil imports from Russia in order to stop the flow of revenue pouring into Russia, people familiar with the matter told Bloomberg on Friday.
Officials from the U.S. and the EU are discussing banning oil and gas, crafting a payment mechanism that would hold back revenue that Russia has made since it invaded Ukraine, and a price cap, the sources said.
The EU has been under constant pressure to curb its intake of Russian oil and gas since Russia invaded Ukraine, but its heavy reliance on Russian energy supplies has raised questions about whether such curbs would truly hit Russia as hard as some would hope—without harming the EU. A full-on ban of Russian crude oil and gas would naturally boost prices, a reality that would also boost Russian revenues, even with fewer barrels sold. This would also create pain for the EU, which would not only be energy starved, but would pay more for the energy sourced from elsewhere.
For the United States, the issue is critical, so it is no wonder why the U.S. is in talks with the EU to follow through with a ban in such a way that would not raise retail gasoline prices at home.
So far, a plan has not been found that would harm Russian President Vladimir Putin while insulating the EU and the U.S. from further price shocks.
The EU has been working on another round of Russia sanctions, and early this month, the EU banned Russian coal imports—but that measure won’t go into effect until sometime in mid-August after Germany pressured the EU Commission drafting the ban to extend the wind-down period due to its substantial Russian coal habit.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.