A gas station of the Russian oil company Lukoil in Romania. MARTON MONUS (Portal)
The European Union is looking for new formulas to prevent Russia from continuing to finance its war in Ukraine. The European Commission is already considering a new round of sanctions against Moscow – the tenth – over the invasion, which will be a year old, and another measure aimed at targeting the Russians may be added to the list of organizations and individuals banned from the EU meet economic system based on trading in hydrocarbons. The European Commission is proposing that member states cap the price of Russian oil derivatives, which varies between 100 euros per barrel when it comes to petrol, diesel or aviation fuel, or a discount of 45 euros per barrel on the market price in this case Paraffins or products used in the chemical industry, according to the draft sent to the countries to which EL PAÍS had access. The measure would be imposed jointly with the G-7 countries that are not part of the Community Club (US, Japan, UK and Canada), sources from the negotiations point out.
In December, the EU and G-7 already capped the price of oil, set at $60 or 5% below the market price cap, and agreed to review that cap. Now a group of countries – mainly Estonia, Latvia, Lithuania and Poland – are demanding that this review be carried out now and for more than that 5% to further reduce the power of the economic machinery that sustains the war. Meanwhile, on February 5, the self-imposed ban on the purchase of oil derivatives from the Urals, imposed by the G-7 countries and the EU. However, both measures have a limited scope as they only affect a number of countries; and some of them, like the United States, Canada, the United Kingdom, or Spain, were not big customers of Moscow and its hydrocarbon companies.
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The solution found by the G-7 and the EU to extend the sanctions effect was to approve a price cap on crude oil or derivatives for third countries. And why should these other states accept it? Western companies engaged in oil buying and selling have a large stake in the fuel market (shipping companies, insurers, reinsurers, guarantors). These companies are strictly prohibited from engaging in these transactions unless the foreign country accepts the border set by the West.
This Friday, the EU states in the Council of the European Union examined the European Commission’s proposal. It was a first exchange of views where everyone’s positions have already been seen. As is usual with any opening of negotiations on a new sanctions package, there is a group of countries (Poland, Estonia, Latvia and Lithuania) that favor a tougher stance on Moscow. And that’s what happened again this time.
The first meeting of ambassadors of EU states ended with a broad consensus on price restrictions and on products made from Russian crude oil to be sanctioned, according to negotiating sources. Another debate was what to do with the oil caps already imposed. The Baltics and Poland are trying to reduce more than what was agreed in December. The proposal doesn’t please some in Brussels, starting with the Commission, where they believe the measure has worked well so far. Since it came into effect, the price of Ural crude oil has remained below this $60 level practically all the time. In contrast, Brent, the benchmark for the oil market in Europe, remains in a range between 75 and 90 dollars. The advantage of this situation is that it deprives the Russian coffers of resources without taking them off the market, so price pressure does not increase.
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