The EU is closing in on a deal to cap the price of Russian crude oil at $60 a barrel before a Monday deadline, though Poland wants new sanctions linked to the plan.
The cap is a highly anticipated and complex political and economic manoeuvre designed to keep Russia’s supplies flowing into global markets while clamping down on President Vladimir Putin’s ability to fund his war in Ukraine.
EU nations sought to push the cap across the finish line after Poland held out to get as low a figure as possible, diplomats said on Thursday. Negotiations were continuing on Friday.
The latest offer comes ahead of a deadline to set the price for discounted oil by Monday, when a European embargo on seaborne Russian crude and a ban on shipping insurance for those supplies take effect.
Here is what to know about the price cap, the EU embargo and what they could mean for consumers and the global economy:
What is the price cap and how would it work?
US Treasury Secretary Janet Yellen has proposed the cap with other Group of 7 leading industrial powers as a way to limit Russia’s earnings while keeping Russian oil flowing to the global economy. The aim: hurt Moscow’s finances while avoiding a sharp oil price surge if Russia’s oil is suddenly taken off the global market.
Insurance companies and other firms needed to ship oil would only be able to deal with Russian crude if the oil is priced at or below the cap. Most insurers are located in the EU or the UK and could be required to participate in the cap.
The $60 figure would mean a cap near the current price of Russia’s crude — which fell this week below $60 a barrel — and is meant to prevent a sudden loss of Russian oil to the world following the new western sanctions.
It is a big discount to international benchmark Brent, which traded at about $87 per barrel Thursday, but could be high enough for Moscow to keep selling, even while rejecting the idea of a cap.
The G7 has led the price cap effort and still needs to approve the figure.
How would oil keep flowing to the global economy?
Universal enforcement of the insurance ban, imposed by the EU and UK in earlier rounds of sanctions, could take so much Russian crude off the market that oil prices would surge, Western economies would suffer and Moscow would see increased earnings from whatever oil it could ship in defiance of the embargo.
Russia, the world’s No. 2 oil producer, has already rerouted much of its supply to India, China and other Asian countries at discounted prices after Western customers shunned it even before the EU ban.
What effect would different cap levels have?
A $60 cap would not have much impact on Russia’s finances, said Simone Tagliapietra, an energy policy expert at the Bruegel think tank in Brussels. That “will almost go unnoticed,” he said, because it would be near where Russian oil is already selling.
Russian Urals blend sells at a significant discount to international benchmark Brent and fell below $60 for the first time in months this week on fears of reduced demand from China due to outbreaks of Covid-19.
“Up front, the cap is not a satisfying number,” Mr Tagliapietra said, but it would prevent the Kremlin from profiting if oil prices suddenly shoot higher and the cap bites.
“The cap might be lowered over time if we want to increase the pressure on Russian President Vladimir Putin,” he said.
“The problem is: We have already spent a lot of months waiting for a measure to dent [Putin’s oil profits].”
A cap as low as $50 would cut into Russia’s earnings and make it impossible for Russia to balance its state budget, with Moscow believed to require around $60 to $70 per barrel to do that, its so-called “fiscal break-even.”
However, a $50 cap would still be above Russia’s cost of production of between $30 and $40 a barrel, giving Moscow an incentive to keep selling oil simply to avoid having to cap wells that can be hard to restart.
Ukrainian President Volodymyr Zelenskyy has praised a push by Poland for a $30 cap.
Will it work?
Robin Brooks, chief economist at global financial industry association the Institute for International Finance in Washington, tweeted last week that a $30 cap would “give Russia the financial crisis it deserves”.
He said the cap should have been implemented earlier this year, when oil was hovering around $120 per barrel.
“Since then, obviously oil prices have fallen and global recession is a real thing,” he said. “The reality is that it is unlikely to be binding given where oil prices are now.”
Wrangling over where to set the cap highlights disagreement on which goal to pursue: hurting Russia’s finances or taming inflation, with the US coming down on the side of controlling price increases, said Maria Shagina, a sanctions expert at the International Institute for Strategic Studies think tank.
With Monday’s deadline looming, there isn’t “much time to parse out this disagreement for much longer,” she said, adding that “$60 is better than not agreeing at all. They can obviously revise it later on to reflect conditions on the market … and tighten it.”
Former US treasury secretary Steven Mnuchin has dismissed the plan as “ridiculous.”
Mr Mnuchin told CNBC during a panel in November at the Milken Institute think tank's Middle East and Africa summit that the price cap was “not only not feasible, I think it’s the most ridiculous idea I’ve ever heard”.
Rachel Ziemba, an adjunct senior fellow at the Centre for a New American Security think tank, said “this will be an interesting few weeks and few months”.
“Russia has made is clear the countries that abide by the cap won’t receive their oil and that could result in cuts to natural gas exports as well,” she said.
What if Russia and other countries won't go along?
Russia has said it will not observe a cap and will halt deliveries to countries that do. While Russia could ignore the cap if it’s above the selling price of its oil, a lower limit could see Moscow retaliate by shutting off shipments in the hope of profiting from a higher global oil price on whatever it can sell around the sanctions.
Buyers in China and India might not go along with the cap, while Russia or China could try to set up their own insurance providers to replace those barred by US, UK and Europe. Russia could also sell oil off the books by using “dark fleet” tankers with obscure ownership, as have Venezuela and Iran.
Even under those circumstances, the cap would make it “more costly, time-consuming and cumbersome” for Russia to sell oil around the restrictions, Ms Shagina said.
The greater distances involved in shipping oil to Asia means up to four times more tanker capacity is needed — and not everyone will take Russian insurance.
“You need to tap into this dark fleet, and it’s not limitless,” she said. “Iran and Venezuela are using it, rather effectively, but you might face competition with the same targets. … This cat-and-mouse game is always inherent in sanctions mechanisms.”
What about the EU embargo?
Russia may struggle to find buyers for all of the 1 million barrels a day it is shipping to Europe, formerly its biggest customer, but will likely reroute most of them as Europe finds new suppliers on the global market.
The biggest impact from the EU embargo may not come Monday, as Europe finds new suppliers and Russian barrels are rerouted, but on Feb. 5, when Europe’s additional ban on refinery products made from oil — such as diesel — come into effect.
Europe still has many cars that run on diesel. The fuel also is used for lorry transport to get a huge range of goods to consumers and to run agricultural machinery — so those higher costs will be spread throughout the economy.
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
How Filipinos in the UAE invest
A recent survey of 10,000 Filipino expatriates in the UAE found that 82 per cent have plans to invest, primarily in property. This is significantly higher than the 2014 poll showing only two out of 10 Filipinos planned to invest.
Fifty-five percent said they plan to invest in property, according to the poll conducted by the New Perspective Media Group, organiser of the Philippine Property and Investment Exhibition. Acquiring a franchised business or starting up a small business was preferred by 25 per cent and 15 per cent said they will invest in mutual funds. The rest said they are keen to invest in insurance (3 per cent) and gold (2 per cent).
Of the 5,500 respondents who preferred property as their primary investment, 54 per cent said they plan to make the purchase within the next year. Manila was the top location, preferred by 53 per cent.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
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Global state-owned investor ranking by size
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United States
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China
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UAE
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Japan
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Norway
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Canada
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Singapore
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The Bio
Favourite holiday destination: Either Kazakhstan or Montenegro. I’ve been involved in events in both countries and they are just stunning.
Favourite book: I am a huge of Robin Cook’s medical thrillers, which I suppose is quite apt right now. My mother introduced me to them back home in New Zealand.
Favourite film or television programme: Forrest Gump is my favourite film, that’s never been up for debate. I love watching repeats of Mash as well.
Inspiration: My late father moulded me into the man I am today. I would also say disappointment and sadness are great motivators. There are times when events have brought me to my knees but it has also made me determined not to let them get the better of me.
Three ways to get a gratitude glow
By committing to at least one of these daily, you can bring more gratitude into your life, says Ong.
- During your morning skincare routine, name five things you are thankful for about yourself.
- As you finish your skincare routine, look yourself in the eye and speak an affirmation, such as: “I am grateful for every part of me, including my ability to take care of my skin.”
- In the evening, take some deep breaths, notice how your skin feels, and listen for what your skin is grateful for.
The Bio
Favourite place in UAE: Al Rams pearling village
What one book should everyone read: Any book written before electricity was invented. When a writer willingly worked under candlelight, you know he/she had a real passion for their craft
Your favourite type of pearl: All of them. No pearl looks the same and each carries its own unique characteristics, like humans
Best time to swim in the sea: When there is enough light to see beneath the surface
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
General%20Classification
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Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
Company%20profile
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Five ways to get fit like Craig David (we tried for seven but ran out of time)
Start the week as you mean to go on. So get your training on strong on a Monday.
Train hard, but don’t take it all so seriously that it gets to the point where you’re not having fun and enjoying your friends and your family and going out for nice meals and doing that stuff.
Think about what you’re training or eating a certain way for — don’t, for example, get a six-pack to impress somebody else or lose weight to conform to society’s norms. It’s all nonsense.
Get your priorities right.
And last but not least, you should always, always chill on Sundays.
Results
5pm: UAE Martyrs Cup (TB) Conditions Dh90,000 2,200m
Winner: Mudaarab, Jim Crowley (jockey), Erwan Charpy (trainer).
5.30pm: Wathba Stallions Cup (PA) Handicap Dh70,000 1,400m
Winner: Jawal Al Reef, Richard Mullen, Hassan Al Hammadi.
6pm: UAE Matyrs Trophy (PA) Maiden Dh80,000 1,600m
Winner: Salima Al Reef, Jesus Rosales, Abdallah Al Hammadi.
6.30pm: Sheikha Fatima bint Mubarak (IFAHR) Apprentice Championship (PA) Prestige Dh100,000 1,600m
Winner: Bainoona, Ricardo Iacopini, Eric Lemartinel.
7pm: Sheikha Fatima bint Mubarak (IFAHR) Ladies World Championship (PA) Prestige Dh125,000 1,600m
Winner: Assyad, Victoria Larsen, Eric Lemartinel.
8pm: Sheikh Zayed bin Sultan Al Nahyan Jewel Crown (PA) Group 1 Dh5,000,000 1,600m
Winner: Mashhur Al Khalediah, Jean-Bernard Eyquem, Phillip Collington.
Manchester City 4
Otamendi (52) Sterling (59) Stones (67) Brahim Diaz (81)
Real Madrid 1
Oscar (90)
UAE currency: the story behind the money in your pockets
MATCH INFO
Uefa Champions League, Group B
Barcelona v Inter Milan
Camp Nou, Barcelona
Wednesday, 11pm (UAE)
ITU Abu Dhabi World Triathlon
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
Essentials
The flights
Emirates, Etihad and Malaysia Airlines all fly direct from the UAE to Kuala Lumpur and on to Penang from about Dh2,300 return, including taxes.
Where to stay
In Kuala Lumpur, Element is a recently opened, futuristic hotel high up in a Norman Foster-designed skyscraper. Rooms cost from Dh400 per night, including taxes. Hotel Stripes, also in KL, is a great value design hotel, with an infinity rooftop pool. Rooms cost from Dh310, including taxes.
In Penang, Ren i Tang is a boutique b&b in what was once an ancient Chinese Medicine Hall in the centre of Little India. Rooms cost from Dh220, including taxes.
23 Love Lane in Penang is a luxury boutique heritage hotel in a converted mansion, with private tropical gardens. Rooms cost from Dh400, including taxes.
In Langkawi, Temple Tree is a unique architectural villa hotel consisting of antique houses from all across Malaysia. Rooms cost from Dh350, including taxes.
THE SPECS
Engine: 2.0-litre 4-cylinder turbo
Power: 275hp at 6,600rpm
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Transmission: 8-speed dual-clutch auto
Top speed: 250kph
Fuel consumption: 6.8L/100km
On sale: Now
Price: Dh146,999
RESULT
Shabab Al Ahli Dubai 0 Al Ain 6
Al Ain: Caio (5', 73'), El Shahat (10'), Berg (65'), Khalil (83'), Al Ahbabi (90' 2)
World Cup League Two
Results
Oman beat Nepal by 18 runs
Oman beat United States by six wickets
Nepal beat United States by 35 runs
Oman beat Nepal by eight wickets
Fixtures
Tuesday, Oman v United States
Wednesday, Nepal v United States
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
2252 – Dh 50
6025 – Dh20
6027 – Dh 100
6026 – Dh 200
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
No Shame
Lily Allen
(Parlophone)
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The specs
Engine: 1.5-litre 4-cylinder petrol
Power: 154bhp
Torque: 250Nm
Transmission: 7-speed automatic with 8-speed sports option
Price: From Dh79,600
On sale: Now
