EU Imposes New Sanctions on Russian Energy Sector
The European Union introduced its 18th package of sanctions against Russia. These measures aim to further reduce Moscow’s oil revenues and restrict its financial operations amid the ongoing conflict in Ukraine. The sanctions focus heavily on the energy sector, shipping, and financial institutions. The new rules include a stricter price cap on Russian oil and expanded bans on shipments and transactions.
New Price Cap on Russian Oil
The EU set a moving price ceiling on Russian crude oil at 15% below the average market price. This limit is roughly $47.60 per barrel, down from the previous $60 cap established by the G7 in 2022. The goal is to cut Russian energy income without disrupting global oil supplies. The cap will apply from 3 September with a 90-day transition for existing contracts. Oil bought above this price cannot be shipped or insured by EU firms.
Restrictions on Petroleum Products and Imports
After a six-month grace period, the EU will stop importing petroleum products made from Russian oil, even if refined outside Russia. Exceptions exist for imports from Norway, Britain, the US, Canada, and Switzerland. The Czech Republic’s exemption from the seaborne Russian oil ban was also removed after it switched to other suppliers. The sanctions target India’s Nayara refinery, partly owned by Russia’s Rosneft, restricting its dealings.
Crackdown on the ‘Shadow Fleet’
The EU banned 105 additional ships from its ports and waters to block Russia’s use of ageing tankers for ship-to-ship oil transfers. This method disguises the origin of Russian oil. The total number of sanctioned vessels now exceeds 400. The EU also blacklisted a private international flag registry operator and an entity in Russia’s liquefied natural gas sector.
Ban on Nord Stream Pipeline Transactions
All transactions related to the Nord Stream gas pipelines under the Baltic Sea are now prohibited. This includes the supply of goods and services connected to the infrastructure, aiming to sever Russia’s gas export routes to Europe.
Financial Sector Sanctions
The EU expanded bans on transactions with Russian financial institutions, many already excluded from the SWIFT system. The sanctions include Russia’s sovereign wealth fund, the Russian Direct Investment Fund (RDIF). The bloc lowered penalties thresholds for foreign entities aiding Russia in evading sanctions or funding the war.
Export Controls and Blacklist Expansion
Exports of certain chemicals, plastics, and machinery to Russia are now banned. Twenty-six new entities were added to the sanctions list for sanction evasion, including organisations in China, Hong Kong, and Turkey.
Diplomatic Challenges
The sanctions package faced delays. Slovakia initially vetoed the rollout due to concerns about a future ban on Russian gas imports by 2028. It withdrew its opposition after assurances from the EU to reduce economic losses. Malta also delayed approval but later consented.
India’s Response to EU Sanctions
India criticised the EU’s unilateral sanctions, denoting double standards in energy trade. The Ministry of External Affairs stated India does not endorse unilateral sanctions and prioritises energy security for its citizens. India’s Nayara refinery, partly owned by Rosneft, is impacted by the sanctions. Nayara operates a major refinery in Gujarat and runs thousands of fuel stations across India.
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