US Warns EU About Price Cap Severity

The Biden administration warned EU delegates yesterday that lower price caps for Russian oil should be approached with caution.

• A US official said Urals prices in the $52/bbl range does not represent broader pricing. This is the level being quoted by price reporting agencies for Russian Urals.
• The US official said the Urals discount to benchmark Brent crude has recently been close to $23 a barrel, falling as low as $17 a barrel which brings the recent Ural price to around $62/bbl – in line with recent EU discussions.
• Some countries including Poland, Lithuania and Estonia have pushed for a far lower $30-a-barrel price limit which is causing difficulty for the EU to come up with an agreement.
• The US official said such prices do not include transportation and other costs associated with Russian crudes. A price cap of $65 a barrel on Russian crude would represent a meaningful price reduction from recent prices, citing an estimated average of $78 per barrel since March 2022.