 "European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium. File image/Reuters")
With the 18th package of sanctions on Russia over its war on Ukraine, the European Union (EU) on Friday targeted Russia’s oil revenue and sanctioned an Indian refinery for the first time.
Under the latest sanctions, the EU lowered the price cap on Russian oil to 15 per cent below the market price to hit at Russian leader Vladimir Putin’s income from the sale of oil that he uses to fund the war on Ukraine and the aggression on Europe.
For the first time, the bloc has sanctioned a flag registry and the biggest Rosneft refinery in India, said EU foreign minister Kaja Kallas.
Kallas was referring to the Vadinar oil refinery in which Russian state-owned Rosneft has a 49 per cent stake. It is the second-largest refinery in India.
Kallas further said, “We’re cutting the Kremlin’s war budget further, going after 105 more shadow fleet ships, their enablers, and limiting Russian banks’ access to funding. Nord Stream pipelines will be banned. A lower oil price cap. We are putting more pressure on Russia’s military industry, Chinese banks that enables sanctions evasion, and blocking tech exports used in drones. (sic)”
Impact Shorts
View AllWhat’s in EU’s latest Russia sanctions
The biggest focus has been to hit at Russia’s income from the sale of oil.
Revising the price cap policy introduced in 2022, the EU has now lowered the price cap from existing $60 per barrel to 15 per cent below the market price, which effectively takes the cap to $47.6. As the cap has now been linked to market price, it will change with time.
Under the price cap regime, shipping, insurance, and financial firms face sanctions if they take part in the sale of Russian oil above the capped price. The regime is aimed at minimising Russian income from the sale of oil.
Additionally, the EU has blacklisted more than 100 vessels in the ‘shadow fleet’ of tankers used by Russia to circumvent oil export restrictions, according to AFP.
The EU has also sanctioned two Chinese banks and has expanded a transaction ban on dealings with Russian banks and has imposed more restrictions on the export of ‘dual-use’ goods to Russia that have the potential of being used in the war in Ukraine.
The EU has also shuttered the defunct Nord Stream 1 and 2 gas pipelines.
What EU sanctions mean for India
In addition to the Vadinar refinery, the EU has sanctioned the Indian flag registry.
A flag registry refers to the official list of all the ships that fly a country’s flags.
Sanctioning a country’s flag list gives the EU power to punish ships over India-flagged ships’ purported role in the sale of Russian oil in violation of sanctions.
To be sure, the EU has not sanctioned the sale of Russian oil but has sanctioned the sale of Russian oil above the price cap.