The European Union is considering temporarily freezing the price cap on Russian oil while the war in the Middle East continues for the fourth month, sources familiar with the discussions reported, Bloomberg reported, quoted by BTA.
Last year, the EU introduced a dynamic mechanism that provides for the price cap for Russian crude oil of the "Urals" variety to be automatically set every six months at a level 15 percent below the average market price. The current threshold is $44.10 per barrel and is subject to review later this summer.
The regime prevents European companies from providing services such as insurance and transportation for oil sold above the threshold.
Oil prices have risen sharply in the wake of the war with Iran and the virtual closure of the Strait of Hormuz. The sources said the next review of the ceiling in July would likely see it raised to at least $65 per barrel, above the previous $60 threshold agreed by the G7 countries.
The EU has so far imposed sanctions on hundreds of vessels and intends to include ships providing services to these tankers in the restrictions, the sources said.
However, the new sanctions package is not expected to include a complete ban on maritime services. Several member states continue to oppose such a measure due to the unstable situation in the Middle East, as well as the lack of support from the other G-7 countries.
According to the sources, the main goals of the new package are to further limit Russia's revenues from the energy sector, increase pressure on the country's financial system and hinder the Russian military industry's access to key supplies.
The sanctions require the unanimous support of all member states before they can be adopted, and the plans are subject to change. Maritime states such as Greece have often expressed dissatisfaction with changes to the price cap mechanism, while other capitals are particularly sensitive to the impact on their own energy and trade interests.
Other proposals for the next package include trade restrictions on certain critical minerals, metals and ores used in the Russian aviation industry and in the production of drones used in attacks on Ukrainian cities, as well as on radio-electronic jamming technologies.
One option being considered is to leave the cap at its current level. Other options include temporarily suspending its automatic increase until the end of the year due to the extraordinary circumstances in the Middle East, or limiting any increase to $60 per barrel in line with the G7 level.
The measure would be part of the EU’s latest sanctions package, the 21st since the start of Russia’s full-scale invasion of Ukraine in 2022. The bloc aims to finalize and formally propose the new measures in early June. Member state ambassadors were briefed on the plans last week.
Other measures under discussion include sanctions against additional banks, oil traders, refiners and crypto-asset operators in third countries that the EU says are being used by Moscow to circumvent restrictions.
It is also planned to include about 20 additional tankers from the so-called shadow fleet, which Russia relies on for oil exports, on the sanctions lists. The regime could later be extended to ships carrying liquefied natural gas, with the aim of limiting the Kremlin’s ability to build a shadow fleet for this type of supply, Bloomberg added.