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EU to propose lowering price cap on Russian oil in new sanctions package EU calls for lower price cap on Russian oil in move to tighten sanctions
(about 4 hours later)
Other measures to include tightening restrictions on ‘shadow fleet’, banks and Nord Stream investment Other measures include greater restrictions on ‘shadow fleet’, banks and Nord Stream investment
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The EU executive is to propose lowering the price cap on Russian oil as it seeks to tighten energy and financial sanctions targeting the Kremlin’s ability to wage war. The EU executive has called for lowering the price cap on Russian oil as it seeks to tighten energy and financial sanctions against the Kremlin’s ability to wage war.
The president of the European Commission, Ursula von der Leyen, is expected to put forward a plan on Tuesday to reduce the price at which Russian oil can be sold from $60 (£44) a barrel to $45, according to an internal document. The president of the European Commission, Ursula von der Leyen, proposed that western countries reduce the price at which Russian oil can be sold to $45 (£30) a barrel, down from the current $60.
The $60 price cap was agreed through the G7 in December 2022 with the aim of reducing Russia’s revenues from fossil fuels. G7 leaders are due to meet next week in Canada. The $60 price cap was agreed through the G7 in December 2022, when oil traded at well over $100 a barrel, with the aim of reducing Russia’s revenues from fossil fuels.
The commission will also propose tightening up measures against the “shadow fleet”, hundreds of old and poorly maintained tankers that enable Russia to export oil to countries such as India at a price above the western-imposed cap. However, experts have said the falling price of oil, which hit a four-year low of $59.77 in April, had rendered the cap “meaningless”. The price of a barrel of Brent crude has since recovered to about $67.
For the first time EU sanctions are targeted against the captain of a shadow fleet tanker, an Indian national. Officials hope this will have a chilling effect, discouraging others from crewing the vessels, which fly under a flag of convenience. Von der Leyen told reporters that lowering the cap would “restore its effectiveness”. Oil exports, she added, represented one-third of Russian government revenues. “We need to cut this source of revenues,” she said.
She expressed confidence the G7 would adopt the lower oil-price cap, despite uncertainty about Donald Trump’s appetite to impose sanctions on Vladimir Putin. G7 leaders, including von der Leyen, are due to discuss the proposal in Canada next week.
Referring to her recent discussions with the Republican senator Lindsey Graham, von der Leyen said: “We are very much aligned in the aim to urge Russia by those massive sanctions to come to the negotiation table and to be serious about negotiations that lead towards a just and lasting peace … And therefore I am very confident that we will achieve this goal [the $45 price cap].”
Graham is the author of a bill that he says would impose “bone-breaking sanctions” on Putin including a 500% tariff on goods from countries importing Russian oil.
As part of the EU’s proposed 18th round of sanctions against Russia, the commission also wants to tighten up measures against the country’s “shadow fleet”, hundreds of old and poorly maintained tankers that enable the Kremlin to export oil to countries such as India at a price above the western-imposed cap.
For the first time Brussels is targeting sanctions against the captain of a shadow fleet tanker, an Indian national, according to an unpublished draft sanctions proposal. Officials hope this will have a chilling effect, discouraging others from crewing the vessels, which fly under a flag of convenience.
The commission also proposes listing 70 more shadow fleet vessels on its sanctions list, bringing the total under designation to more than 400. One EU diplomat estimated last month that the fleet now stood at about 800 tankers, up from just 100 two years ago.The commission also proposes listing 70 more shadow fleet vessels on its sanctions list, bringing the total under designation to more than 400. One EU diplomat estimated last month that the fleet now stood at about 800 tankers, up from just 100 two years ago.
The measures trailed by von der Leyen also include restrictions on doing business with the companies running the Nord Stream 1 and Nord Stream 2 pipelines. Nord Stream 1 was rendered unusable after a series of underwater blasts for which no one has ever claimed responsibility; Nord Stream 2 never received a licence. But Russia has expressed interest in reviving the gas projects connecting Russia and Germany. EU officials say they wish to dissuade investors from getting involved. The EU’s foreign policy chief, Kaja Kallas, claimed that sanctions on the shadow fleet were having a marked impact. “When sanctioned, Russia’s shadow fleet tankers cannot dock in ports and Russia has to find new vessels. This costs some more and runs down their profits.”
The latest proposals, which would have to be agreed unanimously by the EU’s 27 member states, would also impose restrictions on doing business with 22 banks, cutting them off from the Swift financial messaging system.
The commission last week promised “hard-biting” measures in its 18th round of restrictive measures against Russia, after von der Leyen met the US senator Lindsey Graham. The Republican senator is the author of what he says is a bill that would impose “bone-breaking sanctions” on Vladimir Putin including a 500% tariff on goods from countries importing Russian oil.
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In its account of the meeting last week, the commission said: “We need a real ceasefire, we need Russia at the negotiating table, and we need to end this war. Pressure works, as the Kremlin understands nothing else.” After the EU adopted the last round of sanctions in May, which included banning a further 189 shadow fleet vessels from EU ports and accessing services, such as insurance, Kallas said Russia’s oil revenues exports via the Black Sea and Baltic Sea routes had declined by 30% in a week.
European leaders last month vowed to impose “massive” sanctions on Russia if Putin did not agree to a 30-day ceasefire within days. As previously trailed by von der Leyen, the EU executive also want to impose restrictions on doing business with the companies involved in the Nord Stream 1 and Nord Stream 2 pipelines.
Nord Stream 1 was rendered unusable after a series of underwater blasts for which no one has ever claimed responsibility; Nord Stream 2 never received a licence. However, Russia has expressed interest in reviving the gas projects connecting Russia and Germany. EU officials say the measure is necessary to dissuade investors from going back to business as usual.
The latest proposals, which would have to be agreed unanimously by the EU’s 27 member states, would also impose restrictions on doing business with 22 banks, cutting them off from the Swift financial messaging system.
European leaders last month vowed to impose “massive” sanctions on Russia if Putin did not agree to a 30-day ceasefire within days. “We are ramping up pressure on Russia because strength is the only language that Russia will understand,” von der Leyen said.