Thursday, December 8

The EU reaches an agreement in principle to set a cap on the price of Russian oil in the new sanctions package

Principle of agreement of the 27 to impose a cap on the price of Russian oil in the new package of sanctions in response to the recent annexation of part of Ukraine decreed by President Vladimir Putin. This Tuesday night the ambassadors of the 27 before the EU have reached a general agreement on a new package of sanctions against Russia that includes a cap on the price of Russian oil, as reported by Politico.

The agreed package represents the eighth round against the Kremlin, which was proposed by the president of the European Commission, Ursula von der Leyen, a week ago.

Several countries, such as Hungary – Putin’s main ally in the EU – and Greece, Cyprus and Malta – for their shipping interests – had expressed their concern about the new measures, which foresees imposing conditions on merchant ship insurers, who could only work with ships that load oil at a certain price.

Malta, Greece and Cyprus, whose tanker fleets carry the majority of Russian oil, were concerned about the impact of the cap on oil prices, leading to some concessions towards those countries, according to a draft text dated Monday published. by politician

From now on, we must wait for the final version of the text to be approved by the ambassadors between Wednesday and Thursday, when the details of the measures will be known.

The current package, von der Leyen announced without giving details, sets the legal basis for the price cap, which was previously agreed upon by the G7.

The new sanctions, von der Leyen announced, are also intended to erode Russia’s steel industry and deprive the Kremlin’s military of key technologies. In addition, it includes a new list of people who participate in the war and prohibits EU citizens from being part of the boards of directors of Russian state companies.

G7 framework

The plan agreed upon by the G7 calls for participating countries to deny Western-controlled services, including insurance, finance, brokerage and shipping, to oil shipments priced above a fixed cap.

To secure those services, oil buyers would make “certificates” to suppliers saying they bought Russian oil at or below the cap.

Maritime service providers will not be held responsible for false price information provided by buyers and sellers of Russian oil.

G7 officials believe the plan will work because the London-based International Group of Protection and Indemnity Clubs provides marine liability cover for about 95% of the world’s oil-carrying fleet, reports Reuters.

Traders point to parallel fleets that can carry Russian oil using Russian and other non-Western insurance that could be used to circumvent sanctions enforcement efforts, while it is unclear how many ports will accept ships insured by Russia.