EU Approves Tougher Sanctions on Russia... Russian Oil Price Cap Frozen for One Year

AP Yonhap News

The European Union (EU) has agreed on its 21st package of sanctions against Russia. However, due to opposition from some member states, the level of sanctions was lowered compared to the original plan, and the price cap on Russian crude oil will remain at the current level for the next year.

According to Yonhap News Agency and foreign news outlets, EU member states reached a final agreement on strengthening sanctions against Russia on July 23 (local time).

The last-minute variable in this agreement was the opposition from Greece. The EU had initially planned to impose a complete ban on the transportation of Russian liquefied natural gas (LNG) to third countries. However, considering the burden on Greece's shipping industry, the EU allowed an exception for Russian LNG produced in the Arctic region when transported to third countries, which enabled the agreement to proceed.

António Costa, the President of the European Council, stated after the adoption of the 21st Russian sanctions package, "These sanctions target the areas where they can have the greatest impact on Russia—energy, financial services, cryptocurrency, and trade," adding, "The EU's support for a just and lasting peace in Ukraine remains unwavering."

Under these measures, the price cap on Russian crude oil will be frozen at the current level of $44.10 per barrel (approximately 65,000 won) for one year. This is intended to prevent Russia from gaining additional revenue due to rising oil prices amid heightened tensions in the Middle East and the resulting increase in international oil prices.

European Commission President Ursula von der Leyen announced on the social media platform X (previously Twitter), "We will keep the oil price cap unchanged for one year to ensure that Russia's war machine cannot benefit from market shocks."

The EU, the Group of Seven (G7), and Australia introduced the oil price cap system in 2022, after the outbreak of the war in Ukraine, to block Russia's access to war funds. Under this arrangement, maritime services such as insurance and shipping are not provided for Russian crude oil traded at prices above the cap.

The new sanctions package also expands sanctions against Russian financial institutions and cryptocurrency-related companies. Dozens of Russian officials who have supported the invasion of Ukraine have been added to the sanctions list.

A total of 94 Russian financial institutions, including banks and the Moscow Exchange, were included in the list of sanctioned entities. Once the sanctions are officially implemented, these entities will be subject to asset freezes, travel restrictions, and limits on financial transactions. For the first time, vessels that support Russia's so-called "shadow fleet" have also been sanctioned.

The EU explained that these measures are intended to intensify pressure on Russia's financial system. With the protracted war in Ukraine increasing the burden on Russia's economy, the sanctions particularly focus on the financial sector.

However, the new sanctions package has been assessed as less stringent than initially envisioned due to disagreements among member states. The proposal to entirely ban shipments of Russian LNG was withdrawn, and the EU did not introduce an entry ban for Russian soldiers participating in the war in Ukraine. Member states only agreed to make efforts to pursue such measures in the future.

Due to opposition from Bulgaria, a move to include Patriarch Kirill, the leader of the Russian Orthodox Church, on the sanctions list was also abandoned. In addition, the proposal to ban imports of Russian cod and pollock was excluded due to opposition from Portugal and France.

While the EU has agreed on new sanctions to block Russia's access to war funds, conflicting interests among member states meant that some measures regarding energy and seafood were omitted, resulting in only limited reinforcement of sanctions.

This content was produced with the assistance of AI translation services.