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EU Aims for Russia Sanctions Deal Today, Including Oil Price Cap

Economy Oct 03, 2022 13:24
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2/2 © Bloomberg. A pressure gauge sits attached to crude oil pipework in an oilfield near Almetyevsk, Russia, on Sunday, Aug. 16, 2020. Oil fell below $42 a barrel in New York at the start of a week that will see OPEC+ gather to assess its supply deal as countries struggle to contain the virus that’s hurt economies and fuel demand globally. Photographer: Andrey Rudakov/Bloomberg 2/2

(Bloomberg) -- The European Union is aiming for a preliminary deal as soon as Monday on a new sanctions package meant to punish Russia for escalating its war in Ukraine and illegally annexing four occupied territories there.

“I am hopeful in a couple of hours we can have a unanimous agreement on the sanctions package,” Polish ambassador to the EU, Andrzej Sados, told reporters. “We are very close to it and there is determination to clinch a deal ASAP.”

Sados said the deal would likely include political backing for imposing a price cap on Russian oil, with the exact level of the cap to be unanimously approved at a later stage.

Member states are eager to reach an agreement before EU leaders meet in Prague on Oct. 7, said people familiar with the matter, who asked not to be identified because the discussions are private. 

Hungary has been an obstacle in the discussions, according to the people. A group of countries including Greece, Cyprus and Malta, which have large shipping industries, has also expressed concern that they would be affected by curbs on transporting Russian oil. Sanctions decisions in the EU require unanimity, giving each country an effective veto.

Chemicals, Aviation

The broader sanctions package would also target a range of individuals and entities, including senior Russian ministry officials and people involved in staging the recent, widely condemned referendums. It would also restrict access to aviation items, electronic components and specific chemical substances to deprive Russia’s military from important technologies. 

Read more: EU Aims to Exempt Maritime Pilot Services From Russia Oil Ban

Some nations are upset that the latest draft of the sanctions appears to have weakened several of the proposed measures, including the removal of a Russian diamond mining company from the penalty list, one of the people said.

The sanctions would add a ban on shipping Russian oil, but carve out an exemption for oil priced at or under a level set by a coalition of the Group of Seven and other countries, according to a draft of the proposal seen by Bloomberg. 

To allow for an oil price cap, the bloc will have to change its current legislation. In June, EU nations agreed to a full ban on insurance and financial services for seaborne oil, while shipping was spared from the restrictions. Most of those prohibitions are due to kick in Dec. 5 alongside a ban on EU purchases of Russian crude.

The G-7, which endorsed a cap earlier this month, has said it wants an agreement in place before that date.

©2022 Bloomberg L.P.

EU Aims for Russia Sanctions Deal Today, Including Oil Price Cap
 

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