The European Union has introduced its 18th package of sanctions against Russia in response to its ongoing conflict with Ukraine. This initiative is primarily focused on further diminishing Russia’s oil and energy sector.
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Here’s a summary of the key components included in this latest sanctions package.
Oil Price Cap
The EU will implement a dynamic price cap on Russian crude, set at 15% below its average market price, as announced by EU diplomats. Currently, this translates to a cap of approximately $47.60 per barrel, significantly lower than the $60 maximum the Group of Seven (G7) countries sought to establish since December 2022.
The new price cap is set to come into effect on September 3, with a 90-day transition period for existing contracts. This measure will prohibit trade in Russian crude purchased at a higher price by disallowing shipping, insurance, and reinsurance companies from handling tankers that carry such oil.
As G7 nations have urged for a reduced cap following a decline in oil futures that rendered the previous cap less effective, the EU has decided to proceed independently. However, enforcing this measure may prove challenging, as oil transactions primarily occur in dollars, control over which resides with US banks.
Shadow Fleet and Energy Trade
The EU will cease imports of petroleum products derived from Russian crude after a six-month transitional period. However, this ban excludes imports from Norway, the UK, the US, Canada, and Switzerland, as clarified by EU diplomats.
Additionally, the EU has targeted India’s Nayara oil refinery, where Russia’s largest oil producer, Rosneft, holds a primary stake. The Czech Republic’s previous exemption from the EU’s ban on seaborne Russian crude oil imports has also been revoked, as the country has transitioned entirely to non-Russian suppliers this year.
In a bid to dismantle the so-called “shadow fleet”—older tankers used for transporting Russian oil to evade sanctions—105 vessels are now barred from accessing EU ports or engaging in ship-to-ship oil transfers. Sanctions have also been applied to a private operator of an international flag registry and certain entities in Russia’s liquefied natural gas (LNG) sector.
Notably, the EU has now enforced sanctions on over 400 vessels associated with this shadow fleet.
Nord Stream
Transactions related to Russia’s Nord Stream gas pipelines beneath the Baltic Sea will also be prohibited. This includes any provision of goods or services connected to these projects.
Financial Sector
The EU will ban all transactions with Russian financial institutions, which are already excluded from the global SWIFT financial messaging system. This prohibition extends to dealings with the Russian Direct Investment Fund (RDIF) and its investments, aiming to further limit Russia’s access to international financial markets and foreign currency.
Furthermore, EU member states have agreed to reduce the threshold for implementing additional sanctions on foreign financial and credit institutions that undermine existing sanctions or contribute to Russia’s military efforts.
Export Bans and New Blacklist Entries
The EU plans to blacklist 26 new entities involved in circumventing sanctions. This list includes individuals from China (seven), Hong Kong (three), and Turkey (four), as indicated by diplomats. Additionally, certain chemicals, plastics, and machinery have been added to the list of goods that EU nations are prohibited from exporting to Russia.
Delayed Approval
This latest sanctions package marks the EU’s 18th response since Russia initiated its full-scale invasion of Ukraine in 2022. Approval of the package faced delays for several weeks due to objections from Slovakia and Malta. Slovakia initially sought assurances against potential losses stemming from a separate EU plan to ban Russian gas imports by 2028. After receiving specific guarantees from the EU earlier this week, Slovakia lifted its veto.
In the words of an unnamed EU diplomat, “The aim is clear: to apply relentless pressure on Russia and support Ukraine’s sovereignty.”
Edited By Ali Musa
Axadle Times International – Monitoring
