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The National
2 days ago
- Business
- The National
EU's wave of Russia sanctions three years later doesn't signal urgency
If the Russia -Ukraine War was the First World War, then by now we would be past the Russian Revolution about three years in. If it were the Second World War, the Germans would be about to surrender at Stalingrad. But in our present, with fighting largely deadlocked, Europe has just begun a cautious offensive on the economic front. The latest package of sanctions adopted on Friday takes aim at Russia's energy earnings. The mostly ineffective cap on the price of Russian oil exports using EU ships or services will now be set at 15 per cent below market prices, instead of $60 per barrel as previously, meaning $47.6 per barrel initially, which will be revised several times per year. Czechia's exemption from the EU ban on Russian oil imports has ended, closing one small remaining spigot. Further ships in Russia's 'shadow fleet' and traders working with Russian oil have been added to the sanctions list, as has 'one entity in the Russian LNG [liquefied natural gas] sector'. And transactions with the Nord Stream gas pipelines under the Baltic Sea by any EU operator are banned. Perhaps most materially, the EU has also banned the import of refined petroleum products made from Russian crude in third countries, mostly affecting India and Turkey, but potentially GCC countries, too. Indian fuel exports to the EU doubled in 2023 to 200,000 barrels a day, and have remained elevated since. The latest European sanctions have already markedly tightened the diesel market. Indian refiner Nayara, owned 49.13 per cent by Russia's state Rosneft, is hit with sanctions. Previous European sanctions have been notably leaky. The Russian war juggernaut has been slowed but not derailed. Brussels still seems lackadaisical about the urgency of the situation, as missiles and drones pound Ukrainian cities, and thousands of North Korean troops appear on the battlefield. Europe's own bloody colonial history should tell it the fate of those who allow foreign military adventurers to interfere in their domestic affairs. Is it enough? Putting sanctions only now on a pipeline that was mostly blown up in September 2022 may not be the height of courage. More aggressive measures have been hamstrung until now by opposition from some EU members, who are either politically friendly to Russia, or who claim that special circumstances should entitle them to exemptions. Sanctioned goods, including military components, continue to flood into Russia through backdoors in Central Asian states and through China. The oil price cap has been largely ineffective because it is hard to monitor, and because Greek and other European shipowners have been happy to sell old vessels into the shadow fleet. The most effective sanctions on Russian energy were imposed by Moscow itself, and by the still mysterious bombers of the Nord Stream pipeline. Russia started cutting down on gas exports to the EU from September 2021, well before launching its invasion, then imposed payment conditions that most of its buyers rejected. The EU did at least move in March to ban the trans-shipment of Russian LNG through European ports. This was an inconvenience, as Russia's Arctic LNG terminals typically use expensive ice-class tankers, then transfer their cargoes to standard vessels in warmer waters. In May, the European Commission presented a roadmap to phase out remaining imports of Russian LNG and gas by pipeline. In 2024, Russia sold about 21 billion cubic metres of LNG and 27 BCM of gas by pipeline to the EU, still almost a fifth of the bloc's total. The pipeline gas would anyway fall this year, since transit by Ukraine, having remarkably continued through the war, was finally cut off at the end of last year. The LNG will be diverted to other markets, primarily in Asia, but the pipeline gas has no other outlet. Russia currently earns roughly $230 billion per year from its exports of oil, gas and coal. This has already fallen from around $400 billion during the invasion year of 2022. The new measures on gas would cut its revenues by some $5 billion annually. Effective wielding of the new, lower price cap on oil might chop off $30 billion or so over the course of a year. Enforcement will be crucial, as Russia, like Iran, continues to juggle the shadow fleet, and traders find way to obfuscate oil's origins. Higher costs for tankers and transactions add a few more billion. But this is nibbling at the edges, not biting into the jugular vein. The wildcard is the US. President Donald Trump's erratic moves on the conflict and his threats of the puzzling 'secondary tariffs' on countries buying Russian oil are hard to analyse. New, much more aggressive sanctions proposed in Congress would target Russia's trade partners, but they have been paused during a 50-day hiatus announced by Mr Trump. It is not clear if the US will join enforcement of the new oil price cap, which will be crucial in its effectiveness. Where Russia stands Still, the Russian economy is under strain. Budget revenues have been revised down this year because of lower global energy prices. The national wealth fund could be depleted by next year, as the government withdraws from it to cover the deficit. The economy contracted in the first quarter, despite the huge spending on military production, even official figures admit of inflation being about 10 per cent, and central bank interest rates are at 20 per cent. The future of the war effort depends crucially on the direction of oil prices, and how far Opec+ is able to keep raising output without seriously denting the market. By October, Russia's allowable crude production will not be far short of its previous historic high in 2022. It will become apparent how sustainable this level is. Oil prices have shrugged off the impact of the Israel-Iran war. They were not excited either by the news of the latest sanctions. As for gas, the expected increasing oversupply from next year onwards may stiffen sinews in European capitals to get off Russian supplies entirely. It does not seem likely that this war will end like the Eastern Front in the First World War, with bread riots in Petrograd, nor like the Second World War, with crushing battlefield defeats accompanying economic collapse. But sanctions are putting ever more sand in the gears of a war machine already strained to its limits. The hope in Kyiv must be that the pressure on their weary soldiers and civilians eases, and a combination of military and financial pressure opens a path to genuine peace.
Russia Today
3 days ago
- Business
- Russia Today
‘Rout' of Ukraine will continue
Russia will continue to rout Ukrainian forces on the battlefield despite the EU's decision to impose its 18th package of sanctions against the country, former President Dmitry Medvedev said on Friday. The EU member states had approved the sweeping economic restrictions earlier in the day, mostly targeting Russia's energy and financial sectors, in another attempt to pressure the country over the Ukraine conflict. Moscow has repeatedly condemned the sanctions as 'illegal.' The measures will not derail Moscow with regards to the conflict any more than the previous 17 packages did, according to Medvedev, who now serves as deputy chairman of Russia's Security Council. 'Our economy will, of course, survive, and the rout of the Banderite regime will continue. Strikes against objects in the so-called Ukraine, including Kiev, will be carried out with increasing force,' he wrote on Telegram. Moscow should politically steer away from the EU and distance itself from the bloc, he added. Brussels' new sanctions bar all transactions with 22 additional banks, as well as with the Russian Direct Investment Fund. The package also imposes a ban on utilizing the Nord Stream gas pipelines, which were mostly disabled by sabotage in 2022 and have remained unused since. The ban also bars the provision of goods and services for the pipeline, 'thus preventing the completion, maintenance, operation and any future use' of the gas infrastructure, the European Council said in a statement on Friday. Additionally, the new restrictions add a further 105 ships to a blacklist of what Brussels calls the 'shadow fleet' engaged in transporting Russian crude and bypassing the bloc's 'price cap' on Moscow's oil exports. The sanctions lower the price ceiling and add a mechanism for adjusting to future changes in market conditions. Russia has 'built up a certain immunity' to sanctions and 'adapted to life' under them, Kremlin spokesman Dmitry Peskov told journalists on Friday, commenting on the EU decision.
Time of India
4 days ago
- Business
- Time of India
Explained: What are EU's fresh sanctions on Russia? Here's what they mean
The European Union unveiled its 18th package of sanctions against Russia, aiming to further squeeze Moscow's oil revenues and financial networks over its ongoing war in Ukraine. Approved on Friday, the new measures include a series of toughened restrictions focused largely on the energy sector, shipping, and financial dealings. Here's a what the latest sanctions include: 1. Russian oil: A fresh price cap At the heart of this package is a new price cap on Russian oil. The EU plans to impose a moving price ceiling, pegged at 15% below the average market price of Russian crude. Currently, that would put the cap at around $47.60 per barrel, a significant drop from the $60 limit introduced by the G7 in December 2022. This lower threshold is designed to curb Russia's energy income while avoiding a shock to global oil supplies. The measure takes effect from 3 September, with a 90-day transition period for existing contracts. Under the new rules, any crude purchased above the cap cannot be shipped, insured or reinsured by EU firms, as per a Reuters report. The European Union and Britain had been urging the G7 to reduce the existing $60 price cap on Russian oil, arguing that falling oil futures had rendered it ineffective. However, opposition from the United States stalled any collective action, prompting the EU to act independently. Still, the bloc faces limits in enforcing the measure, as oil is predominantly traded in US dollars and payment clearing is largely controlled by American banks. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 2 BHKs starts at ₹ 72.6 Lakh | No Floor rise | Zero PLC Mahindra Happinest Tathawade Get Quote Undo After a six-month grace period, the EU will no longer import petroleum products made from Russian oil, even if they're refined elsewhere. This rule excludes imports from Norway, Britain, the US, Canada, and Switzerland. The EU is ending the Czech Republic's exemption from the bloc-wide seaborne Russian oil ban, after the country shifted entirely to alternative suppliers. The EU sanctions package also targets India's Nayara oil refinery, in which Russia's largest oil producer, Rosneft, holds a major share. 3. Targeting the 'Shadow Fleet' In an effort to disrupt Russia's workaround using ageing tankers: 105 additional ships have been banned from EU ports and waters. These include vessels engaging in ship-to-ship transfers, a common method used to mask the origin of Russian oil. The total number of sanctioned ships now exceeds 400, according to Reuters. The EU also blacklisted a private operator of an international flag registry and an entity involved in Russia's liquefied natural gas (LNG) sector, though it did not disclose their names. 4. Nord Stream: Total cut-off The EU will ban all transactions linked to the Nord Stream gas pipelines, which run under the Baltic Sea. This includes the provision of goods and services to the infrastructure. 5. Financial sector: A blanket ban In a major escalation, the EU will now prohibit all transactions with Russian financial institutions, many of which are already cut off from SWIFT. The ban also targeted Russia's sovereign wealth fund, the Russian Direct Investment Fund (RDIF). EU countries agreed to lower the threshold for penalising foreign financial entities found to be helping Russia evade sanctions or fund the war effort. 6. Export restrictions and new blacklist entries The bloc will bar exports of certain chemicals, plastics and machinery to Russia. 26 new entities have been added to the sanctions list for circumventing restrictions, including, 7 in China, 3 in Hong Kong, 4 in Turkey. 7. Delays and diplomatic hurdles The approval of this package wasn't smooth. Slovakia and Malta initially delayed the rollout: Slovakia objected due to concerns about an upcoming EU plan to ban Russian gas imports by 2028. It lifted its veto earlier this week after receiving guarantees from the EU to mitigate potential losses. How did India react? The ministry of external affairs on Friday hit out at the European Union's 'unilateral' sanctions on Russia, criticising the bloc's 'double standards' in energy trade. MEA spokesperson Randhir Jaiswal said in a statement in post on X, "We have noted the latest sanctions announced by the European Union. India does not subscribe to any unilateral sanction measures. We are a responsible actor and remain fully committed to our legal obligations." The MEA further emphasised that ensuring energy security is a top priority for the Indian government to meet the essential needs of its citizens. 'We would stress that there should be no double standards, especially when it comes to energy trade,' the statement added. The EU's latest sanctions against Russia over the Ukraine war include measures targeting an Indian refinery partly owned by Rosneft. The Russian energy giant holds a 49.13% stake in Nayara Energy Ltd, formerly Essar Oil. Nayara operates a major refinery in Vadinar, Gujarat, with an annual capacity of 20 million tonnes, and runs over 6,750 fuel stations across India. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Mint
4 days ago
- Business
- Mint
Europe gets tougher on Putin
European leaders on Friday at long last cranked up sanctions on Russia, sending Vladimir Putin a message that there will be more economic costs if he continues his drone and missile barrages on Ukraine. Now it's Washington's turn. Brussels' latest sanctions package ratchets up economic pressure on Moscow by closing loopholes and punishing foreign companies that circumvent them. Europe has already ended most of its Russian natural gas imports by pipeline. Oil tankers that are insured by European companies are also prohibited from transporting Russian crude sold at more than $60 a barrel. The goal has been to weaken Russia's war machine by reducing its oil and gas revenue while minimizing the pain for Europe. But Russian oil and gas have continued to flow to global markets by other channels. Russia has deployed uninsured shadow fleets to sell crude to refineries in India and Turkey, which export fuel back to Europe. The price cap also has less effect now, when crude is trading around $65 a barrel, than when it took effect in December 2022 and crude fetched $80 a barrel. Friday's package will lower the price cap to $47.60 a barrel, which will be revised every three months, and restrict imports of refined fuel that is produced from Russian crude. Europe will further isolate Russia from the global financial system by kicking 22 Russian banks out of the Swift financial-transfer network. It will sanction two Chinese banks that have helped Russia circumvent sanctions and a large oil refinery in India that is partially owned by Russia's state-run oil company Rosneft. Europe is also telling Mr. Putin not to count on reviving the Nord Stream gas pipelines between Russia and Germany. The pipelines were damaged in an underwater explosion in 2022, but some U.S. and European investors are eager to repair and restart them once the war in Ukraine ends. German Chancellor Friedrich Merz isn't so keen. The new sanctions will bar transactions that could revive or repair the pipelines. Mr. Merz and other European leaders deserve credit for their resolve, though lower oil and gas prices helped by increased U.S. production have made this easier. Venture Global signed a 20-year contract on Wednesday to supply LNG to Italy's Eni from its new Louisiana CP2 export facility. Sanctions are no substitute for the weapons Ukraine desperately needs. But Russia's economy is showing signs of trouble with interest rates near 20% to contain inflation. Bloomberg News this week reported that executives at some of Russia's biggest banks have discussed the possibility of seeking state bailouts if more loans on their books default. All of this suggests the West's economic leverage over Moscow is growing if countries unite to use it. President Trump could join this effort by backing a bipartisan Senate bill that would empower him to impose 500% tariffs on countries that purchase Russian oil and gas products. He could also work with Europe to confiscate some $300 billion in Russia assets frozen in the West to buy weapons for Ukraine. There's no good excuse for Mr. Trump not to follow Europe's lead now and put more pressure on Russia to negotiate a cease-fire.
Mint
5 days ago
- Business
- Mint
Nayara refinery to be hit hard by EU sanctions on Russian oil
New Delhi: In measures targeting Russia's ability to raise revenues from its oil and energy sector in the midst of war with Ukraine, the European Union (EU) on Friday unveiled sanctions on the Rosneft-owned Nayara Energy's 20 million-tonne refinery in Vadinar, Gujarat, and lowered the price cap on Russian oil by 15% to $47.6 per barrel from $60. It also imposed sanctions on more 'shadow fleet ships', which are largely used for moving crude oil from Russia. Kaja Kallas, EU's high representative for foreign affairs and security policy said in a post on social media platform X that the 27-nation grouping has also agreed to ban financial transactions related to Russia's Nord Stream gas pipeline. Late on Friday night, Randhir Jaiswal, spokesperson of the ministry of external affairs, said in a statement: 'We have noted the latest sanctions announced by the European Union. India does not subscribe to any unilateral sanction measures. We are a responsible actor and remain fully committed to our legal obligations." The development is expected to hit Nayara hard, especially its exports of petroleum products. Nayara is one of only two Indian companies, the other being Reliance Industries, which exports petroleum products from the country, since only private companies are allowed to export petroleum products. India's exports of petroleum products rose 3.4% in volume terms to 64.7 million tonnes in FY25, compared to 62.6 million tonnes in FY24, according to data from the Petroleum Planning and Analysis Cell. To be sure, while Nayara has the largest private sector retail fuel network of the country with about 6,500 fuel bunks, its share of the domestic market is small considering around 90,000 petrol pumps in India–a market dominated by state-owned companies. Meanwhile, according to reports, Rosneft is also looking at selling its stake in its subsidiary. In March, The Economic Times reported that Russia's Rosneft, which owns 49.13% stake in Nayara Energy, is looking to exit the Indian venture, as due to sanctions, the Russian company has not been able to repatriate earnings from Nayara Energy in the past few years. 'Petroleum product exports from Nayara's refinery to Europe would be impacted by the sanctions. Europe has been a major buyer of these products. Further, the likely talks of a stake sale by Rosneft also may be impacted," said Shashi Mathews, partner at law firm CMS Induslaw. However, he added that refiners should be able to navigate the price cap, as they have been already operating with the $60 price cap for the past few years. 'It's an evolving situation, it needs to be seen how this builds. The implementation of sanctions on the shadow fleet and the price cap would be key. Impact on supplies will raise prices," said Prashant Vasisht, senior vice president and co-group head, corporate rating, Icra. A statement by the Council of European Union said: 'The bloc will ban the import of 'refined petroleum products made from Russian crude oil and coming from any third country – with the exception of Canada, Norway, Switzerland, the United Kingdom and the United States – thereby preventing Russia's crude oil from reaching the EU market through the back door." Queries sent to Nayara and Rosneft remained unanswered till press time. Experts said the move may close an emerging market for India. Europe is a key market for Indian petroleum products along with South East Asia and the US. In a report in December 2024, S&P Global Commodity Insights had said: 'Europe is increasingly turning out to be the brightest market for Indian oil products exporters that have capitalized on the shortages of diesel and other fuels due to geopolitical tensions and are shipping plentiful cargoes, a trend that is set to spill over to next year." It had noted that refineries in India have ramped up exports to Europe and the Mediterranean since Europe and the UK banned Russian diesel in 2023. The report added that Reliance Industries is the largest products exporter to Europe. Kallas, who is also the vice-president of the European Commission, said on X that the EU is standing firm.'We're cutting the Kremlin's war budget further, going after 105 more shadow fleet ships, their enablers, and limiting Russian banks' access to funding. For the first time, we're designating a flag registry and the biggest Rosneft refinery in India." According to the EU statement, the latest sanction on 105 vessels takes the total vessels under sanction to 444. These vessels will be subject to a ban on port access and on the provision of a broad range of services related to maritime transport. 'Full-fledged sanctions (asset freezes, travel bans, bans on providing resources) target Russian and international companies managing shadow fleet vessels, traders of Russian crude oil and a major customer of the shadow fleet – a refinery in India with Rosneft as its main shareholder," said the council's statement. 'With today's package, the EU is curtailing Russia's energy revenues through a number of different measures. The EU is lowering the price cap for crude oil from $60 to $47.6 per barrel, to align it with current global oil prices and is introducing an automatic and dynamic mechanism to modify the oil price cap and ensure that this price cap is effective. Oil exports still represent one third of the Russian government's revenues," said the EU statement. Experts said the sanctions on shadow fleet ships may impact supply of Russian crude and lift prices. On Friday, global crude prices increased about 1%. At the time of writing, the September contract of Brent on the Intercontinental Exchange was at $70.16 per barrel, higher by 0.92% from its previous close. Similarly, the August contract of West Texas Intermediate (WTI) on the NYMEX rose 1.13% to $68.30 per barrel. With US President Donald Trump warning of sanctions on countries that import Russian oil, Union minister for petroleum and natural gas Hardeep Singh Puri had said on Thursday while addressing an energy conference in New Delhi that India is not worried about any such penalties and will navigate any eventuality as there is enough supply in the market. Trump recently said the US could impose 100% tariffs on Russia and 'secondary tariffs" on countries importing its oil—mainly China and India—if Moscow didn't agree to a deal to end the Ukraine war in 50 days. Responding to a question on India's likely measures in case secondary sanctions were imposed on Russian oil imports, Union minister Puri said: 'My own view is the price of oil will come down. It will come down only because there is more oil available in the international market. There is more oil coming on the global market from the western hemisphere. I mean countries such as Brazil, Guyana and Canada. They're not even OPEC+ members. I'm not worried at all. If something happens, we'll deal with it." He added that India felt 'no pressure" and had enough supply options to ensure uninterrupted availability even in turbulent times. On Thursday, the ministry of external affairs responded to a recent remark by NATO secretary general Mark Rutte's wherein he had warned of secondary sanctions against countries buying Russian oil. Since the start of the Russia-Ukraine war, sanctions-hit Russia has emerged as the top supplier of oil to India, accounting for about 36% of India's total oil imports. In February 2022 when the war started, it accounted for just 0.2% of India's total oil imports.
