The European Union has rolled out its 18th set of sanctions against Russia, aiming to hit the country’s oil and energy sectors harder. The key move is a new, lower price cap on Russian crude oil, set at about 15% below its current average market price. Right now, that works out to roughly $47.60 a barrel, which is well below the $60 cap the Group of Seven tried to enforce since late 2022. This rule will kick in on September 3, with a 90-day phase-in period for existing contracts.
The goal behind this price cap is to reduce Russia’s income from oil without cutting off supplies completely, which could disrupt global markets. To make this work, the EU plans to ban shipping, insurance, and reinsurance firms from handling tankers carrying oil bought above the cap. While the EU and Britain have pushed to lower the cap due to falling oil prices, the U.S. has so far resisted, limiting how strongly the EU can enforce the new limit since much of the oil trade happens in U.S. dollars.
In addition to the oil price cap, the EU will stop importing petroleum products made from Russian crude after a six-month transition. This ban won’t affect supplies coming from Norway, Britain, the U.S., Canada, or Switzerland. The sanctions also target India’s Nayara oil refinery, which is linked to Russia’s biggest oil producer, Rosneft.
The EU is cracking down on what it calls Russia’s “shadow fleet”—older tankers moving Russian oil to dodge sanctions. An extra 105 vessels have been banned from EU ports and from engaging in ship-to-ship oil transfers. Altogether, over 400 such ships have now faced sanctions. The EU also sanctioned a private international ship registry operator and an unnamed entity in Russia’s liquefied natural gas sector.
On the gas front, the EU will ban all deals connected to Russia’s Nord Stream pipelines under the Baltic Sea, including any supply of goods or services.
The financial side of Russia’s war effort is also being squeezed. The EU will block all transactions with Russian banks and financial bodies, including the Russian Direct Investment Fund, Russia’s sovereign wealth fund. This move builds on the existing ban on Russian access to SWIFT, the global financial messaging system. The EU will also lower the bar for adding new sanctions against foreign financial institutions that help Russia or weaken the existing measures.
The latest package adds 26 new groups to the EU’s blacklist for working around sanctions, with seven based in China, three in Hong Kong, and four in Turkey. Certain chemicals, plastics, and machinery have also been banned from export to Russia.
It took weeks to get this package agreed upon. Slovakia and Malta delayed it, with Slovakia initially vetoing over concerns about an upcoming EU plan to ban Russian gas imports by 2028. The hold-up ended after the EU offered Slovakia some assurances.
This latest round is part of a steady push by the EU since Russia’s full-scale invasion of Ukraine in 2022, aiming to tighten the squeeze on Moscow’s economy and war capacity.