The European Union applies from today its embargo to all imports of Petroleum russian transported by ship to the block and also the prohibition of transporting Moscow crude sold to third countries at a price higher than 60 dollars per barrel agreed by the powers of the G7.
Agreed upon by the heads of state and government at a summit in May, the veto on purchases of Russian oil by member states catches an exception for Hungarywhich will be able to be supplied through the one that reaches it by gas pipeline thanks to the fine print that Prime Minister Viktor Orbán scratched in said negotiations.
All in all, the European embargo affects 90% of all the oil that Russia sold before the war to its EU partners, which since March they have redoubled their efforts to reduce their dependence as much as possible of the Kremlin’s fossil fuels.
In addition, the European Commission stressed this weekend that the cap on the price per barrel agreed with the G7 “does not in any way affect the import ban to the EU Russian crude or petroleum products” nor to the “specific exceptions and derogations” that were agreed
It took several meetings of ambassadors to the EU to unblock at the European level the cap on the price of Russian crude that the G7 and other international partners such as Australia They have been chasing for months a proposal from the United States Secretary of the Treasury, Janet Yellen.
Poland’s reserves
The main stumbling block was Polandwho accompanied at first by the Balts, required a much lower ceiling and he was also looking for a guarantee that the bloc will prepare a new package of sanctions against Moscow. By contrast, Greece, Cyprus and Malta, whose ships transport much of Russia’s oil to other parts of the world, advocated a limit that would not jeopardize the business of their shipping companies.
Finally, the EU vetoes from today the transport of oil sold at a price higher than 60 dollars a barrel and also prohibits European operators from offering insurance and reinsurance, intermediation or other financial services to all shipping companies that transport crude oil above the cap.
The measure includes a review mechanism every two months that will allow the 60 dollars to be adjusted downward if the price of oil in international markets falls below that figure. The objective is achieve that the limit is always at least 5% below the market price.
It also includes a 45-day grace period that will allow European operators to offer transportation or financial services as long as the crude has been shipped before Monday, December 5, and arrives at the port of destination before January 19.
Undermine the revenue of the Kremlin
With this sanction, the EU wants attack one of the Kremlin’s main sources of income to finance his war in the Ukraine. According to EU sources, Russia’s state revenue from the oil business represents 37% of the budget.
In addition, the European Commission calculates that the ceiling of 60 dollars is low enough to hurt Moscow’s accounts (He reckons he’s now trading barrels at a discount to about $65), but also high enough to keep some Russian oil flowing to the rest of the world “at a limited price.”
The EU wants to take advantage of the weight of its maritime industry and its financial services for the transport of Russian oil. “It will not be easy to replace at least in the short and medium term these European services, or in any case it will be very risky”, predict the sources.
From Brussels, therefore, it is believed in the existence of “incentives” or “natural interests” so that countries that are not part of the so-called “oil cap coalition” join the initiative, even indirectly, using the $60 cap in their daily purchase operations.
Faced with this, the regime Vladimir Putin has threatened to stop supplying oil to countries that support or resort to the ceiling at the price of crude oil agreed by the seven main powers of the globe.