What is in the EU's 18th package of sanctions against Russia?

The details of the 18th package approved by the European Union on Friday against Russia for its war in Ukraine. This package is aimed at further damaging Russia's energy and oil industry.

OIL PRICE CAPTABILITY

The package includes a price cap for Russian oil, which is intended to reduce Moscow's revenues from energy without causing global markets to be disrupted by cutting off Russian supply.

EU diplomats have said that the EU will set a price cap for Russian crude oil at 15% less than its average market value.

This means that a cap of approximately $47.60 per barrel is in place at the moment, which is well below the maximum of $60 that the Group of Seven Major Economies has tried to impose from December 2022.

In a press statement, the EU stated that the new price cap would come into effect on September 3, and that existing contracts will be subject to a 90-day period of transition.

The measure is designed to prohibit the trade of Russian crude purchased at higher prices by prohibiting insurance, shipping and reinsurance firms from handling tankers that carry such crude.

The European Union (EU) and Britain are pushing the G7 group to lower the cap, since the oil futures have fallen so much that the $60 cap is largely irrelevant.

The United States, however, has refused to comply, and the EU is left to implement the measure on its own. However, this is not easy, as oil is mostly traded in dollars for which U.S. banks control the payment clearing.

SHADOW FLEET & ENERGY TRADING

After a six-month transition period, the EU will cease to import petroleum products made with Russian crude. However, this ban does not apply for imports from Norway or Britain. It also doesn't include imports from the U.S.A., Canada, and Switzerland.

The EU also sanctioned India's Nayara Oil Refinery, whose main shareholder is Russia's biggest oil producer Rosneft.

After the Czech Republic switched from Russian crude oil to non-Russian sources this year, the EU agreed to remove the exemption granted to the country by the existing bloc ban on seaborne Russian crude imports.

Additional 105 vessels are prohibited from entering EU ports or locks, and transferring oil between ships. This is an attempt to close down the "shadow fleet" (older oil tankers) that transport Russian oil to circumvent sanctions.

In a press statement, the Council of the EU did not name the entities, but said that the EU had also sanctioned a private operator of a registry of international flags and an entity operating in the Russian sector of LNG.

The EU has sanctioned more than 400 ships in the shadow fleet.

NORD STREAM

All transactions relating to the Nord Stream pipeline project, which runs under the Baltic Sea, will be prohibited. This includes any goods or services provided to this project.

SECTOR FINANCIAL

The EU will prohibit all transactions with Russian financial institution - which are already excluded from SWIFT, the global financial messaging system.

The Russian Direct Investment Fund, as well as any investments it holds, will be included in the ban.

The aim is to further restrict Russia’s access to foreign exchange and international financial markets.

The EU also agreed to lower their threshold for further sanctions against foreign financial and credit institution that undermine sanctions or support Russia’s war effort.

EXPORT BANS, NEW BLACKLIST ENTRIES

Diplomats have said that the EU will add 26 new entities to its blacklist for circumventing sanctions. These include seven entities in China, Hong Kong, and Turkey.

The list of products that EU countries can't export to Russia now includes chemicals, plastics, and machinery.

DELAYED APPROVAL

This is the 18th package of sanctions imposed by the EU on Russia since Moscow's invasion of Ukraine.

Malta and Slovakia held up approval for several weeks. Slovakia demanded guarantees to protect it from potential losses resulting from an EU plan that would ban the import of Russian gas before 2028. It dropped its veto when the EU gave Slovakia these guarantees this week. (Reporting and editing by Kevin Liffey, Frances Kerry, and Milan Strahm)

(source: Reuters)