Sweeping EU sanctions plan aims to hit Russian crude exports harder

By Inti Landauro and Julia Payne

BRUSSELS, Feb 6 (Reuters) – The European Commission on Friday proposed a sweeping ban on any services that support Russia’s seaborne crude oil exports, going far beyond previous piecemeal EU sanctions in its effort to stunt Moscow’s key source of income for its war on Ukraine.

Russia exports over a third of its oil in Western tankers – mostly from Greece, Cyprus and Malta – with the help of Western shipping services.

The ban would end that practice, which mostly supplies India and China, and render obsolete a price cap on purchases of Russian crude oil that the Group of Seven Western powers have tried to enforce with mixed success.

EU PROPOSES BROADEST CLAMPDOWN ON RUSSIAN CRUDE EXPORTS

Reuters was first to report in December that the European Union and the G7 were discussing the ban.

Commission President Ursula von der Leyen did not specify how the ban would be phased in or whether it would later include refined products – whose price cap is different – and other energy exports such as liquefied natural gas (LNG).

She said the ban would be “in coordination with like-minded partners”, and that Russian LNG tankers and icebreakers would encounter “sweeping bans” on maintenance and other services.

The G7 set a price cap for Russian crude in 2022 with the aim of curbing Moscow’s revenues while still enabling third countries to import the oil, as long as they paid no more than the cap.

Last year, the EU and a coalition including G7 members Britain and Japan lowered the cap to reflect falls in market prices. It now sits at $44.10 a barrel, compared to $64 currently for Iraq’s similar Basra Medium blend.

The U.S. shunned this coalition, although it did add Russia’s top two oil companies, Rosneft and Lukoil, to its list of sanctioned entities subject to full asset freezes, which the EU has not.

EU TRIES TO PREVENT EXPORT BANS BEING DODGED

The new package of sanctions, the 20th since Russia’s full-scale invasion almost four years ago, is meant to help push Moscow into serious peace negotiations, von der Leyen said.

“Russia will only come to the table with genuine intent if it is pressured to do so. This is the only language Russia understands,” her statement read.

Von der Leyen said the package would also include a new import ban on metals, chemicals and critical minerals not yet under sanctions, and restrict even more European exports to Russia.

The Commission also proposed adding 43 more vessels in Russia’s shadow fleet to its sanctions list, taking the total number to 640, along with 20 more Russian regional banks. It proposed further measures against cryptocurrency companies that enable Russia to circumvent Western sanctions.

EU diplomatic sources said the package would impose travel and transaction bans as well as asset freezes on just over 100 new entities and individuals in all.

If the package is adopted by EU member states, it will utilise a new “Anti-Circumvention Tool”, allowing the bloc to restrict sales of specific sanctioned goods to a third country for the first time.

The statement did not name the target but Kyrgyzstan is under pressure after a string of Kyrgyz banks and cryptocurrency firms were hit by U.S., EU and UK sanctions in recent months for facilitating sanctions evasion.

Sanctions require EU countries’ unanimity to become law. ($1 = 0.8458 euros)

(Reporting by Inti Landauro and Julia Payne; Editing by Bart Meijer and Kevin Liffey)