The EU countries agreed on a price cap on Russia’s oil at $60 per barrel recently. The cap is to be reviewed every two months. A similar mechanism is being discussed for natural gas now, but there is no consensus so far. Should the cap be actually introduced, how is it going to work on the gas market?
Those two mechanisms are of different nature. The oil price cap is a political mechanism used to control the sales of Russia’s oil to third countries, as well as the business of the EU-based service companies. This isn’t about the European market really. The gas price cap is a way to somehow hold down the gas price in Europe.
The conceptual difference is that the EU countries agreed on an embargo on Russia’s oil, transported by sea, in advance. Therefore, Russia does not supply any oil to the EU anymore, and the price cap would only regulate its supplies to other countries and how the EU-based service companies would work with those supplies.
Those countries that did not back the oil price cap are not really tied to this decision, as it’s more of a political nature. Obviously, buyers are using it to pressure Russia and purchase oil at a lower price, but that’s as far as it goes. The gas situation is different: no embargo is planned against Russia’s supply of natural gas to the EU so far.
The second difference is the proportion of Russia’s commodities. At the moment, the EU receives about 7% of all gas it consumes from Russia.