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EU approves toughest sanctions yet on Russia, including a lower oil price cap, after Slovakia lifts its block following gas import talks.

EU permanent representatives agreed on the 18th package of sanctions against Russia on Friday, EU High Representative for Foreign Affairs and Security Policy Kaja Kallas said.

According to her, the approved restrictions will be one of the “toughest” sanctions packages against Russia to date.

The EU is now expected to complete approval of the sanctions package – at a higher level, after which the list of restrictive measures will be published in the Official Journal of the EU.

Energy sector:

• The price cap on Russian oil has been reduced from US$60 to US$47,6 per barrel, with a dynamic review mechanism introduced to ensure effectiveness;
• A ban has been imposed on the importation of oil products refined from Russian crude in third countries (with certain exceptions including Norway, the UK, the US and Canada);
• A new ban on transactions related to Nord Stream pipelines has been introduced, including the provision of goods or services, effectively ending any future use of their infrastructure;
• Sanctions have been imposed on 105 additional vessels of Russia’s so-called shadow fleet, bringing the total number of targeted ships to over 400. At the same time, three Japanese vessels have been removed from previous sanctions lists.
• Financial sector:
• Full complete ban on any transactions with the Russian Direct Investment Fund (RDIF) and its subsidiaries. This is stated in the decision of the EU Council.
• The existing SWIFT-related sanctions have been expanded to a full transaction ban, adding 22 more Russian banks to the list, nearly doubling it;
• A ban on transactions with the Russian Direct Investment Fund, its investments, and financial institutions supporting those investments. Four Russian companies that received such investments have also been sanctioned;
• The criteria has been lowered for imposing sanctions on financial institutions in third countries that assist Russia in circumventing sanctions, particularly in relation to the oil sector or Russia’s defence industrial base.
• Trade sector:
• Sanctions have been imposed on 26 more companies for helping Russia bypass sanctions, including 14 entities outside Russia: seven in China, three in Hong Kong, and four in Türkiye;
• Additional export bans have been introduced to limit Russia’s access to technologies used in its defence sector, including machine tools involved in the production of Iskander missiles;
• The transit ban has been extended to cover new categories of goods used in construction, transport and energy;
• The export ban list has been expanded to include certain products from the mechanical engineering sector, the chemical industry, as well as selected metals and plastics
• Background:
• On the morning of 18 July, the EU’s Committee of Permanent Representatives (Coreper) approved the long-delayed 18th package of EU sanctions against Russia, which had been stalled due to opposition from Slovakia and Malta.
• On the evening of 17 July, both countries informed the EU Council that they were ready to withdraw their objections.
• The package includes sanctions against 105 shadow-fleet vessels, a lower oil price cap and measures targeting banks and companies outside of Russia that are involved in supporting its war machine.

The new package will include sanctions on the Nord Stream gas pipelines, as well as 105 vessels of the Russian shadow fleet. The restrictions will affect the Rosneft oil refinery in India. The EU countries also agreed to lower the price ceiling for oil from Russia. Kallas did not specify the parameters, but, according to diplomatic sources told Reuters, it will be reduced to about $47.6 per barrel. In addition, restrictions will be imposed on several Chinese banks, which the EU believes are linked to Russia and help circumvent sanctions. Also, according to Kallas, the EU will put “more pressure” on the Russian defense industry.

“We will increase pressure on the Russian military industry and Chinese banks that allow sanctions to be circumvented, and we will block the export of technologies used for drones,” Kallas wrote on her page on the social network X.

Earlier, Slovakian Prime Minister Robert Fico said that his country, which had long blocked the adoption of the sanctions package, would support it. Fico said that he had agreed with EC President Ursula von der Leyen on guarantees for Slovakia in connection with gas prices.

The 17th EU sanctions package was approved on May 20, imposing restrictions on 189 tankers in the shadow fleet. European Commission President Ursula von der Leyen has said pressure on Russia will continue until Russian President Vladimir Putin agrees to a peace deal with Ukraine.