The European Union will ban imports of Russian crude when the Russian oil price cap is implemented. This price cap measure would take place on December 5 according to the G7 plan.
Depriving Russia of oil revenues
The European Union will ban imports of petroleum products as of February 5. This measure aims to deprive Russia of its oil revenues, the country being one of the main producers and exporters. Kadri Simson, European Commissioner for Energy says:
“Our sanctions will cover crude for EU member states, so we will not buy Russian crude oil as of December 5 and we have covered the potential oil price gap for international buyers with our eighth sanction package.”
In addition, these European Union sanctions will accompany a G7 plan in parallel. Indeed, it also aims to limit oil revenues for Russia. Shipping service providers will be able to export Russian oil, but only at imposed low prices.
The EU ban is forcing Russia to look to new markets for its exports. The joint implementation of the G7 plan will limit the benefit of this Russian reorientation towards new partners. However, Europe is currently rushing to fill up on Russian diesel before the ban.
Remaining uncertainties
For the European Union, the general framework is imposed following the negotiations. However, details remain to be worked out and uncertainties persist. The International Energy Agency, in particular, is speaking out about the consequences that these measures could have.
According to the institution, depriving Moscow of its oil revenues could create uncertainty in the oil markets. As a result, pressure on prices could increase, especially on diesel. In the United States, guidance on this plan to cap Russian oil prices is expected soon.
The U.S. State Department expects possible setbacks in the implementation of the agreement. Finally, discussions among the G7 partners are continuing in preparation for the deadline. Indeed, the risk of lack of time before an agreement remains.
