EU Agrees on Russian Crude Oil Price Cap... Russia Pressures with "Oil Supply Suspension" Threat

"Cannot Tolerate Illegal Annexation of Ukrainian Territory"
Russia: "Oil Supply Only to Countries Complying with Price System"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The European Union (EU) has agreed on the 8th round of sanctions against Russia, primarily focusing on the implementation of a price cap on Russian crude oil. While the specific price ceiling has yet to be determined, Russia has strongly opposed the measure and warned that it will cut off oil supplies to countries that agree to the price cap.

According to the Associated Press on the 5th (local time), the Czech Republic, holding the rotating presidency of the EU, announced in a statement that the 8th round of sanctions against Russia had been agreed upon. Under this additional sanctions package, the maritime transport of Russian crude oil and refined products to third countries will, in principle, be prohibited if the price exceeds the set cap. The Czech side described the sanctions as "a strong EU response to Putin's illegal territorial annexation."

Ursula von der Leyen, President of the European Commission, also expressed her welcome for the member states' agreement on the 8th sanctions package, emphasizing, "We will never accept Russia's fake referendums or any form of annexation of Ukrainian territory."

However, countries with high dependence on Russian crude oil and refined products or those primarily responsible for maritime transport, such as Hungary, Greece, Malta, and Cyprus, have been granted exceptions with eased sanctions, leading to expectations that the actual impact will be limited. The specific price cap was not disclosed on the day.

Alongside the price cap on Russian oil, the EU plans to expand import restrictions on Russian steel products, tobacco, paper, wood, pulp, and advanced technology products. This sanctions package is expected to come into effect officially by the 6th unless any of the 27 member states raise objections.

Meanwhile, Russia has strongly opposed the 8th sanctions and pressured countries adopting the price cap by threatening to halt oil supplies. Russian Deputy Prime Minister Aleksandr Novak warned at a press conference, "The price cap will cause serious harm to the energy market, leading only to shortages and price increases. We will continue to supply oil only to countries that adhere to the existing market-based pricing system."