EU Agrees to Cap Russian Oil at $60 per Barrel

European Union flags fly outside the European Commission headquarters in Brussels (Reuters)
European Union flags fly outside the European Commission headquarters in Brussels (Reuters)
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EU Agrees to Cap Russian Oil at $60 per Barrel

European Union flags fly outside the European Commission headquarters in Brussels (Reuters)
European Union flags fly outside the European Commission headquarters in Brussels (Reuters)

European countries agreed to cap Russian oil price at $60 per barrel to further weaken Moscow's ability to finance its war in Ukraine.

With this agreement, the bloc countries joined their allies in the Group of Seven (G7), especially the US, UK, and Australia, after Poland obstructed the measure before it withdrew its objection on Friday evening.

The cap is set to be implemented starting Monday when the European Union's embargo on Russian seaborne crude goes into force.

Energy expert Phuc-Vinh Nguyen of Jacques Delors Institute said Russia had earned $71 billion selling oil to EU clients since its February invasion of Ukraine.

Russia's annual defense budget is estimated at $63 billion.

"We can formally agree to the decision," Poland's EU ambassador, Andrzej Sados, told reporters after his country pressed to set a lower price, according to Agence France-Presse (AFP).

The EU presidency, currently held by the Czech Republic, confirmed member state ambassadors had agreed on the price cap and that the decision would enter into force when published in the EU official journal this weekend.

On Friday, the White House also "welcomed" the agreement, and National Security Council spokesman John Kirby told reporters Friday that "the cap itself will have the desired effect on limiting Putin's ability to profit off of oil sales and limit his ability to continue to use that money to fund his war machine."

The EU sanctioned Russian oil traveling by sea beyond the $60 limit to curb the revenue Moscow earns from deliveries to countries such as China or India.

The measure will enhance the effectiveness of the European ban, which comes months after the US and Canada ban.

Russia is the second largest exporter of crude oil in the world. Without setting a ceiling, it will be straightforward for them to reach new buyers at market prices.



Gold Retreats as Dollar Firms; Fed Decision Looms

FILE PHOTO: A decorated bracelet is displayed at the opening of "Antique Gold and Silver of Romania" exhibition at Romania's National History Museum in Bucharest December 19, 2013. REUTERS/Bogdan Cristel/File Photo
FILE PHOTO: A decorated bracelet is displayed at the opening of "Antique Gold and Silver of Romania" exhibition at Romania's National History Museum in Bucharest December 19, 2013. REUTERS/Bogdan Cristel/File Photo
TT

Gold Retreats as Dollar Firms; Fed Decision Looms

FILE PHOTO: A decorated bracelet is displayed at the opening of "Antique Gold and Silver of Romania" exhibition at Romania's National History Museum in Bucharest December 19, 2013. REUTERS/Bogdan Cristel/File Photo
FILE PHOTO: A decorated bracelet is displayed at the opening of "Antique Gold and Silver of Romania" exhibition at Romania's National History Museum in Bucharest December 19, 2013. REUTERS/Bogdan Cristel/File Photo

Gold prices dipped on Monday, pressured by a firmer US dollar, while investors focused on the Federal Reserve's first meeting of 2025 for more guidance on the interest rate path.

Spot gold dropped 0.7% to $2,751.71 per ounce by 0748 GMT, after trading just below record-high levels on Friday. US gold futures fell 0.8% to $2,756.30.

The dollar gained 0.2%, making gold expensive for other currency holders, Reuters said.

"The US dollar could be the main culprit for gold's weakness... However, the current movement suggests that the downside for the yellow metal is still limited, potentially aided by safe-haven flows," IG market strategist Yeap Jun Rong said.

The US and Colombia pulled back from the brink of a trade war after the White House said the South American nation had agreed to accept military aircraft carrying deported migrants.

Gold is considered a hedge against geopolitical turmoil and inflation. It also tends to thrive in a low interest rate environment as it yields no interest.

Fed policymakers are largely expected to keep rates steady at the end of their Jan. 28-29 meeting, marking the first pause in the rate-cutting cycle that began in September.

"Market focus will likely be on how the Fed reacts to comments from President Trump, who has called for continued interest rate cuts," Reliance Securities' senior analyst Jigar Trivedi said.

Data since the Fed's December meeting has kept intact the core view among Fed officials that inflation will continue to move steadily, if slowly, towards 2%, with a low unemployment rate and continued hiring and economic growth.

COMEX gold speculators raised net long position by 21,864 contracts to 234,358 in the week to Jan. 21, data showed on Friday.

Spot silver dropped 1.3% to $30.20 per ounce, palladium dipped 1.8% to $969.83 and platinum fell 0.9% to $940.40.