Energy market: New oil sanctions against Russia apply

Since this Sunday, the EU and the G7 have again intervened in the world market with new punitive measures against Russia. The aim is to slow down Russia’s war machine.

Oil products from Russia may no longer be imported into the European Union from this Sunday. The import restriction is based on a sanctions regulation passed by the 27 member states last June because of the Russian war of aggression against Ukraine. It came into force shortly after the decision but provided for a long transitional period for the oil products embargo. The import of Russian crude oil into the EU has been largely banned since last December. There is only one exception to the oil products embargo for Croatia.

Also effective this Sunday is a regulation intended to force Russia to sell oil products below the market price to buyers in other countries. For products such as diesel, it provides a price ceiling of 100 US dollars (around 92 euros) per barrel, for lower-quality petroleum products such as heating oil it should be 45 dollars (around 41 euros) per barrel (159 liters). For comparison: on international exchanges, a barrel of diesel for delivery to Europe was last traded at prices equivalent to around 100 to 120 euros.

Both measures are intended to help limit Russia’s trade gains, thereby also limiting Russia’s warfare capabilities. According to the EU Commission, the upper price limit for Russian crude oil deliveries to third countries, which was introduced last December, is estimated to cost Russia around 160 million euros a day. The aim of the price cap is at the same time to prevent new price jumps on the international markets in order to protect the EU states and third countries.

EU Commission President Ursula von der Leyen said that together with the group of leading Western industrialized nations (G7), Russia’s income would be reduced and the stability of the international energy markets guaranteed.

In order to enforce the price cap, it was decided that services essential for the export of Russian oil products could in the future only be provided with impunity if the price of the exported oil did not exceed the price cap. Western shipping companies can continue to use their ships to transport Russian oil products to third countries such as India. The regulation also applies to other important services such as insurance, technical assistance, and financing and brokerage services.

Negotiations about the concrete upper price limits had been difficult in the past few days. According to diplomats, Poland, and the Baltic states demanded the lowest possible amounts in order to keep Russia’s income as low as possible. On the other hand, other countries feared that Russia could then stop deliveries, which could result in a shortage of supply and a rise in world market prices.

According to diplomats, as a concession to countries like Poland, it has now been agreed to change the rules for the continuous review of price caps so that downward adjustments are more likely.


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