The European Union intends to accelerate the introduction of a price ceiling for Russian oil, which was previously approved by the G7 countries. The mechanism can be adopted at the level of the EU countries in a new package of sanctions that European countries have begun to prepare in connection with the mobilization announced in Russia and with the escalation of hostilities in Ukraine. The British Financial Times and Bloomberg write about this, noting that the US and the EU are now joining forces in this direction.
In addition to oil, the eighth package of EU sanctions may include luxury goods from Russia (we are talking, in particular, about diamonds), as well as the introduction of personal restrictions. Sources of publications note that the possibilities of restrictions are already almost at the limit, therefore, in addition to discussing new ones, the countries intend to focus on Russia's capabilities to find "leaks in the sanctions regime" and eliminate them.
Particular attention in the new package of sanctions is planned to be paid to the IT sector and bans on the supply of technologies and equipment that are critical for the Russian information system. Moreover, the authorities of some countries propose to extend these restrictions not only to Russia, but also to Belarus, which helps Moscow to circumvent sanctions. The Financial Times notes that the most critical Baltic countries and Poland also insist on disconnecting all major Russian banks from the SWIFT system.
Difficulties with the introduction of new sanctions remain the same. The main opponent of anti-Russian sanctions – Hungary – has traditionally opposed any new restrictions. Against this background, the EU even wants to reform voting on political decision-making in order to overcome the veto of one country. With regard to new sanctions against Russian oil, a confrontation is expected between the countries in which the shipping business is developed – Greece, Cyprus and Malta. Nevertheless, diplomats look at the prospects for introducing new restrictions with restrained optimism, realizing that the reaction to the mobilization from the EU should follow, and the interests of Hungary, which has already won a number of exceptions for itself, will not be affected in the event of new measures.
Concerns arise about the consequences of the introduction of the ceiling on oil prices. Some countries believe that such a decision will lead to a new jump in oil and other energy prices. In the context of a severe energy crisis in Europe, this creates new risks for its unity in the face of emerging problems. Moreover, the current plan to counter the energy crisis is still not ready, and the consequences of the oil price ceiling have not been fully calculated. In addition, the two largest new buyers of Russian oil, China and India, will most likely not join the restrictions, which means that the negative effect for Moscow from these measures may be limited and not as effective as the EU would like.
Nevertheless, the United States insists that China and India's refusal to participate in the mechanism will not significantly affect Russia's pricing policy, as the negotiating position of these countries will become more effective and tougher and they will be able to get themselves even greater energy discounts from Moscow, which will hit budget revenues. and the ability to finance the war. The new package of EU sanctions will be discussed at an informal meeting of country leaders on October 6.
At the same time, Russia's oil revenues are already at their lowest levels since 2021. The International Energy Agency (IEA) has previously noted that the volume of oil supplies to China and India cannot compensate Russia for losses from the European market. What's more, the decline in sales opportunities is hurting the country's oil industry, which may have to cut production and build it back up later due to a lack of funding and technology.