BRUSSELS — The EU will propose freezing the adjustment mechanism in its oil price cap on Russian crude to prevent it from rising with global benchmarks, European Commission President Ursula von der Leyen said on Tuesday.
That would stop Russia from benefiting from the rise in oil prices resulting from Iran’s closure of the Strait of Hormuz.
Presenting the EU’s 21st package of sanctions on Russia, von der Leyen explained that “our oil price cap has a built-in adjustment mechanism to follow the market. It was not made for market shocks like the one caused by the closure of the Strait of Hormuz.”
The price cap was last reduced in January, to $44.10. With oil prices rising steadily after the U.S. and Israel attacked Iran and that country blocked the Strait of Hormuz, the automatic adjustment mechanism would see the price cap actually increase from July.
