EU embargo on Russian crude oil imports in force, price cap in effect

EU embargo on Russian crude oil imports in force, price cap in effect

Imports of Russian crude oil are prohibited in the European Union from Monday, with limited exemptions, as an embargo agreed in June has now entered into effect.

The embargo, agreed in a package of sanctions to punish Russia for invading Ukraine, technically entered into force after adoption but allowed for a transition period for EU member states to phase in the ban.

Exemptions also apply to Hungary, Slovakia and the Czech Republic, three EU member states particularly dependent on pipeline oil from Russia due to their geographical location and inability to quickly replace imports.

At the same time, a price cap on seaborne Russian oil, designed to hit Kremlin revenues from energy exports, is now also in effect and limits exports to other countries at $60 per barrel.

The price limit is linked to a previous decision by the G7 group of leading economies to sanction Russian oil exports to the wider global economy, such as to China and India.

Under the cap, providing certain Western services for Russian oil transported by sea, including insurance, financing and technical assistance, is to be prohibited if the oil was sold above the $60 threshold.

The limit is to be reviewed every two months, using prices for Russian oil provided by the International Energy Agency as a reference, a statement from the European Council said.

Ukraine had called for a cap of $30 per barrel. But the West feared setting the price too low would result in Russia pulling crude oil from the market, thus leading to steep price spikes.

Another price cap on refined oil products is to apply from February 2023 when the EU ban on imports of refined oil products also comes into effect, the statement read.