Ouch! EU's 18th Sanctions Package to Sting Putin with Lower Oil Prices
EU member states aim to inflict economic pain on Putin by lowering the cost of crude oil
After a month of intense diplomacy, the EU Commission has pulled no punches with their 18th sanctions package against Russia. EU Commission President von der Leyen is tightening the screws, targeting oil prices, Russian shadow fleets, and the banking sector.
"What they don't understand is pain," said von der Leyen in Brussels, referring to Russia. The package includes tougher caps on oil prices, slashing them from $60 per barrel to $45 (approximately $40). This move comes after the G7 countries, EU, Australia, and the Commission agreed on a price cap for Russian oil in December 2022 to slash Moscow's energy export revenues.
The Commission's reaction to the market conditions sees the further reduction in oil price, as von der Leyen explains. The global market price for crude oil has gradually approached and even dipped below the $60 mark. This reduction will be discussed during the G7 summit next week in Alberta, Canada. Von der Leyen is "very confident" that they'll achieve this goal.
The Ghost Fleet and Banks Under Fire
Von der Leyen also aims to target the so-called Russian shadow fleet for dodging sanctions, announcing sanctions against 77 additional ships. Moreover, 22 more Russian banks will find themselves on the sanctions list. Von der Leyen declared further export bans on machines, metals, plastics, chemicals, and dual-use goods that could be used for weapons systems.
But Lithuanian President Gitanas Nauseda criticizes the lack of consequences from the sanctions threats that were made during German Chancellor Friedrich Merz's visit to Kyiv about a month ago. Nauseda argues that the measures in the 18th sanctions package must be comprehensive to preserve the credibility of the EU's sanctions and support for Ukraine.
The effectiveness of punitive measures is a contentious issue, with EU High Representative Kaja Kallas arguing the latest package has "significant" impacts. Critics, however, complain that the sanctions are too lax, and components used by the Russian army continue to enter the country.
Toothless Tigers? The Future of EU Sanctions on Russia
The EU sanctions include freezing Russian assets within the EU. Although the EU only uses the interest from these assets to support Ukraine currently, a proposal for seizing these assets is being considered, despite concerns that seizing assets could violate international law and undermine trust in the EU as a financial hub.
Meanwhile, in the US Senate, a massive sanctions package against Russia is being prepared, with tariffs of 500 percent on products from countries buying oil, gas, uranium, and other goods from Russia. Such secondary sanctions would significantly impact countries like India or China if the EU also decided to impose them.
As the fight between sanctions, diplomacy, and military force continues, it remains uncertain how effective these measures will truly be in putting an end to the conflict in Ukraine and reshaping relations between the EU and Russia.
Sources:
- ntv.de
- mau/AFP
Keywords:
- EU
- EU Commission
- EU Commission President
- Sanctions
- Ghost Fleet
- Russian Shadow Fleet
- Banking Sector
- The EU Commission's 18th sanctions package, targeting oil prices, Russian shadow fleets, and the banking sector, aims to affect both Putin and the Russian economy, with tougher caps on oil prices slated to drop from $60 per barrel to $45.
- In addition to the oil sector, the sanctions also aim to target the Russian shadow fleet for evading sanctions, announcing sanctions against 77 additional ships, and 22 more Russian banks will find themselves on the sanctions list.
- As the effectiveness of these sanctions is a topic of debate, EU High Representative Kaja Kallas argues the latest package has "significant" impacts, while critics claim the sanctions are too lax, with components used by the Russian army continuing to enter the EU.