Hundreds of tankers could be blocked from European ports in a new effort to crack down on the illegal sale of Russian crude, which Western countries fear is helping to finance the war in Ukraine.
EU countries finally reached an agreement on Wednesday after weeks of tense negotiations 381">signed off on the 11th package of sanctions to be imposed on Moscow in just over a year. But rather than imposing new sanctions, draft documents seen by POLITICO show Brussels’ focus is now on tightening loopholes in existing rules, creating powers for secondary sanctions and naming and shaming companies that flout the rules .
“Attempts to circumvent Union restrictive measures have resulted in a sharp increase in deceptive practices by vessels transporting Russian crude oil and petroleum products,” reads the text of the Council’s decision.
officials are concerned about the so-called shadow fleet Hundreds of older tankers carrying Russian oil were potentially bought at prices well above the $60 a barrel price cap imposed by the G7.
Many of the ships, which are believed to be owned by an opaque network of shell companies – many of which are reportedly linked to Greece – are understood to have been docked at Russian ports to hide the fact turn off their navigation systems, or take fuel from other tankers. sea to obscure its origin.
Measures proposed by the European Commission and agreed by member states would prevent ships suspected of these questionable practices from entering EU ports “regardless of flag of registration”. Tankers also must inform authorities if they plan to make ship-to-ship oil transfers within specific geographic areas “at least 48 hours in advance”.
“There is some potential challenge in the package and some additional stress for companies on the compliance side, but my feeling is that ultimately it has been diluted,” according to Byron McKinney, director of global market intelligence at S&P.
A “conservative” analysis by S&P estimates that a total of 167 tankers have been involved in a ship-to-ship transfer with a Russian vessel subsequently docked at an EU port.
Countries with large maritime industries such as Greece, Cyprus and Malta initially expressed reservations about plans to crack down on the practices, amid speculation that they were trying to protect their shipping companies.
“The new package is good, but is it radical? Probably not,” said Maria Shagina, senior sanctions researcher at the International Institute for Strategic Studies. “The EU could potentially do a lot more to hurt Russia, but we are now at the point where everyone has a kind of fatigue – you have Greece and Hungary naming and bargaining over the embarrassing list. are doing and keeping this alliance together is a challenge.”
“You have a geographic divide between the Poles and the Balts – who basically want a complete ban – and Germany, France and other states who are saying, ‘Okay, we have to think about the restrictions that keep us from the target. don’t do much harm,'” she said.
Russia has increased oil exports to countries such as India, China and Pakistan in recent months, while figures show the European Union is doing the same import fuel These are refined from crude oil by Asian countries.
For example, Russian crude deliveries to New Delhi have increased from about 1 million barrels per month to 63 million in April alone. Meanwhile, diesel exports to the EU have increased tenfold and jet fuel shipments have increased by more than 250 percent.
However, the arrangement does not violate sanctions rules, as the G7 wanted to cut Russia’s earnings while not destabilizing global oil markets.
In May, the International Energy Agency reported that Moscow’s crude shipments had increased in volume. Risen Despite price controls, up 50,000 barrels per day to 8.3 million barrels, the highest level since the invasion of Ukraine.
“Indeed, Russia may increase volumes to compensate for lost revenue,” its market analysis concluded.
However, according to Maximilian Hess, a fellow at the Foreign Policy Research Institute and author of a forthcoming book titled “The Economic War” on Russia’s sanctions, the oil price cap is having an effect.
“Russian state capacity and the Russian political economy are indeed changing for the worse. Russia is feeling the pain. It cannot invest in its future. It is running on fumes.”
Despite the increase in oil production, about 36 percent of Moscow’s federal budget revenue came from fossil fuels. lower This May compared to last year, the country will be forced to bridge the growing gap if it wants to continue increasing funding for its armed forces.
Leonie Kijewski contributed reporting.