The European Commission held talks with US officials visiting Brussels on Monday 18 December, the day of the publication of the EU’s 12th package of sanctions against Russia (see other news), on the latest developments concerning the Russian oil price cap.
Adopted on 2 December 2022 by the EU Council on the basis of a proposal from the G7 countries and in close collaboration with the ‘Price Cap Coalition’ (see EUROPE 13076/18), this cap on the price of Russian oil exported by sea at $60 a barrel was intended to limit Russia’s ability to finance its war of aggression against Ukraine, while avoiding disruption to global oil supplies.
Although an EU embargo is in force on imports by sea of crude oil originating from Russia (see EUROPE 12961/1), the EU and the G7 countries can authorise their shipping and insurance companies to transport Russian oil to third countries, provided that the price is below the set ceiling.
However, Russia now manages to sell its oil above this cap via two separate channels. In the first case, exporters and buyers have to “deceive” Coalition operators, as one US official explained. In the second case, Russia has succeeded in setting up an alternative fleet whose trade has increased over the past year.
The development of this fleet includes the acquisition of new ships, the search for new insurance mechanisms and trade routes to circumvent the conditions imposed by the G7.
Presenting their approach within the EU, US officials stressed to a number of journalists, including EUROPE, the importance of increasing pressure on these two channels simultaneously.
This involves, firstly, ensuring that the rules are respected for Russian oil sold through the Coalition’s services to guarantee that trade is more compliant and respects the cap imposed.
Secondly, the aim is to make “non-Coalition” trade more expensive for Russia by increasing costs when the country uses this alternative fleet.
“We want to continue to increase these costs and make it more difficult to transport oil outside the G7, while at the same time increasing the number of customers under the cap”, summed up one US official.
The 12th package of sanctions unveiled by the EU Council - including a strengthened information-sharing mechanism to better identify ships and entities engaged in deceptive practices - has been “warmly welcomed” by the US side.
Coalition partners are also working together on stricter compliance standards, particularly in relation to automating the costs associated with the sale of Russian oil and the services provided by the Coalition.
While some operators are doing this individually, “we believe that improving the compliance of all vessels and all sales can help make compliance more rigorous among all these sales professionals”, added a US official.
According to another official, there is currently no question of lowering the level of $60 a barrel, stating that the current level makes it possible to balance the objectives sought, namely “to guarantee that Russia’s capacity to finance the war is limited and that the stability of the oil market is maintained”, avoiding, as well, any disruption to supplies. (Original version in French by Pauline Denys)