Ambassadors of the European Union have approved the 21st sanctions package against Russia in response to its war in Ukraine, introducing new restrictions for the banking sector and reaching a compromise with Greece on easing sanctions related to Russian liquefied natural gas (LNG), EU diplomats said on Thursday.
The package, described by the EU as the largest in four years, includes a one-year exemption with automatic renewal, allowing EU companies to transship Russian LNG to third countries. This decision was made following Greece’s demands. The sanctions require unanimous support from all member states. One EU diplomat noted: “Member states showed solidarity with Greece, and Greece is expected to reciprocate with others in the future.” Athens argued that a ban on Russian LNG transshipment services would merely shift a portion of the market outside Europe and would not impact Russia’s revenues. This measure is set to take effect on January 1, although the import of Russian LNG into the EU will still be banned from that date. Greece dominates the European LNG tanker market and ranks among the largest global operators alongside Japan, China, and the United States.
New sanctions against banks
The EU’s top diplomat Kaja Kallas reported on the X platform that the new sanctions package is “the largest round in four years, totaling 218 positions.” All individuals and organizations on the sanctions list will face full sanctions, including asset freezes, travel bans, and prohibitions on financial transactions. The new restrictions specifically target the banking sector to increase pressure on Russia’s financial system during a period the EU deems particularly vulnerable for its economy. Russian companies have so far managed to sustain trade and financial flows through smaller or regional banks, as well as cryptocurrency networks.
“We hit more than a hundred banks and crypto operators, over 40 shadow fleet vessels, and several oil refineries in Russia and Belarus that help sustain Moscow’s war,” Kallas wrote in her post on X. One diplomatic source clarified that the package covers 94 Russian financial institutions, primarily banks, as well as the Moscow Exchange. As a result, the total number of sanctioned banks has surpassed 100, representing more than half of the 213 Russian banks connected to international financial systems. For 32 of these banks, separate financial transaction bans are being introduced, effectively disconnecting them from the SWIFT system — the global financial messaging network. Russia’s largest banks were disconnected from SWIFT shortly after the full-scale invasion of Ukraine in 2022.
Freezing the review of the oil price cap
The package also includes a 12-month freeze on the review of the price cap on Russian oil, which will remain at 44.10 dollars per barrel. This mechanism aims to reduce Russia’s oil revenues without triggering a sharp increase in global prices. A scheduled review could have raised the price cap following the rise in oil prices due to the war in Iran, potentially allowing Moscow to gain significantly higher revenues from exports using Western shipping and insurance services.
However, most Russian oil is currently sold above the set limit. Urals, the main export grade of Russian oil, has been trading above the cap since February, with its price this week around 67.50 dollars per barrel excluding transportation and insurance costs. President of the European Commission Ursula von der Leyen stated on X: “We… are freezing the adjustment of the oil price cap for a year so that the Russian war machine does not benefit from market shocks.”
Source: Reuters
