What's in the EU's 18th Sanctions Package Against Russia?

EU Unveils 18th Sanctions Package Targeting Russia's Oil and Finance

Overview of the EU's 18th Sanctions Package

By Kate Abnett and Enes Tunagur

Oil Price Cap and Trade Restrictions

BRUSSELS, LONDON (Reuters) -Here are the details of the European Union's 18th package of sanctions against Russia over its war in Ukraine, approved on Friday and aimed at dealing further blows to Russia's oil and energy industry.

Financial Sector Sanctions

OIL PRICE CAP

Export Bans and Blacklist Updates

Central to the package is a lower price cap on Russian oil - a move designed to shrink Moscow's energy revenues without disrupting global markets by severing Russian supply entirely.

Implementation Timeline and Challenges

The EU will impose a moving price cap on Russian crude at 15% below its average market price, EU diplomats said. 

That means a cap of roughly $47.60 per barrel at present, well below the $60 maximum that the Group of Seven major economies have tried to impose since December 2022.

The new price cap will come into force on September 3 and a 90-day transition period will apply to existing contracts, the EU said in a press release.

The measure aims to ban trade in Russian crude bought at a higher price by prohibiting shipping, insurance and reinsurance companies from handling tankers carrying such crude.

The European Union and Britain have been pushing the G7 to lower the cap since a fall in oil futures made the $60 cap largely irrelevant.

However, the United States has resisted, leaving the EU to move forward on its own, with limited power to enforce the measure because oil is largely traded in dollars, for which payment clearing is controlled by U.S. banks.

SHADOW FLEET AND ENERGY TRADE

The EU will no longer import any petroleum products made from Russian crude after a transitional period of six months, although the ban will not apply to imports from Norway, Britain, the U.S., Canada and Switzerland, EU diplomats said.

The EU sanctions also targeted India's Nayara oil refinery with Russia's largest oil producer Rosneft as its main shareholder.

The EU also agreed to end the Czech Republic's exemption from the bloc's existing ban on seaborne Russian crude oil imports, after the country fully switched to non-Russian supplies this year.

An additional 105 vessels are banned from accessing EU ports and locks, or undertaking ship-to-ship transfers of oil - an effort to shut down the so-called "shadow fleet" of older oil tankers used to transport Russian oil and circumvent sanctions.

The EU also put sanctions on a private operator of an international flag registry, and an entity in the Russian LNG sector, the Council of the EU said in a press release, without naming them.

In total, the EU has now imposed sanctions on more than 400 shadow fleet ships. 

NORD STREAM

Transactions related to Russia's Nord Stream gas pipelines under the Baltic Sea will be banned, including any provision of goods or services to these projects.

FINANCIAL SECTOR

The EU will ban all transactions with Russian financial institutions - already excluded from the global financial messaging system SWIFT.

The ban will include transactions with Russia’s sovereign wealth fund - the Russian Direct Investment Fund (RDIF) - as well as its investments.

This aims to further restrict Russia's access to international financial markets and foreign currency.

EU countries also agreed to lower the threshold for imposing further sanctions on foreign financial and credit institutions that undermine the sanctions or support Russia's war effort.

EXPORT BANS, NEW BLACKLIST ENTRIES

The EU will blacklist 26 new entities for circumventing sanctions, including seven in China, three in Hong Kong and four in Turkey, diplomats said.

Certain chemicals, plastics and machinery have been added to the list of goods EU countries cannot export to Russia.

DELAYED APPROVAL

The package of sanctions on Russia is the EU's 18th since Moscow's full-scale invasion of Ukraine in 2022.

Approval was held up for weeks by Slovakia and Malta.

Slovakia had demanded guarantees against potential losses from a separate EU plan to ban imports of Russian gas by 2028, and dropped its veto after the EU offered Slovakia some guarantees earlier this week.

(Reporting by Kate Abnett, Milan Strahm; Editing by Kevin Liffey and Frances Kerry)