The European Union is willing to soften your package sanctions to the exports of russian oil after a weekend of wrangling, though it intends to retain a key provision on shipping that would hamper the ability to Moscow to export your crude.
(You might be interested: European measures against Russian crude would have boosted the price of a barrel)
The bloc will abandon a proposal to ban EU-owned ships from transporting Russian oil to third countries, according to documents seen by it. Bloomberg and people familiar with the matter. However, the insurance ban remains in place and would be a major obstacle to exports.
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Greecewhose economy relies heavily on shipping, was one of the member states that pushed for the removal of the provision on export to third countries from the EU’s sixth package of sanctions over the Russian invasion of Ukrainesaid the cited sources.
The lack of a single position among the nations of the Group of Seven was essential for the proposal to be withdrawn. The move would have further affected Moscow’s exports, a vital source of foreign exchange, especially since the Greeks own more than a quarter of the world’s oil tankers by capacity.
However, if approved, the current proposals will make life considerably more difficult for Moscow.
The ban on taking out insurance would affect the vast majority of the world’s fleet of
tankers that intend to transport Russian barrels. Tanker companies collectively insure their ships against risks, including oil spills.
Through a global organization called the International Group of P&I Clubs in London, shipowners collectively buy cover from 80 reinsurers, including more than 20 of the world’s 25 largest providers.
Therefore, an insurance ban would make it virtually impossible to obtain such coverage, given the large number of European reinsurers, according to a senior senior underwriter directly involved in the business.
EU countries continue to debate the sixth package, with diplomats trying to overcome Hungary’s objections to a proposed oil ban
Russian
The members of The International Group cover 95% of the oil tanker fleet against spills and other maritime liabilities. If they stopped doing so, they would force Moscow or its buyers to seek alternative deals at a time when Russia is facing heavy sanctions.
The EU countries are still discussing the sixth package, and diplomats try to overcome Hungarian objections to a proposed ban on Russian oil. They were unable to reach an agreement over the weekend.
In its initial proposal, the EU had planned to prohibit the transport, including through ship-to-ship transfers, to third countries of crude oil and derivative products originating in or exported from Russia.
This measure has been discarded. The EU’s executive arm is also proposing to ban European companies from providing services, including insurance, needed to transport Russian oil anywhere in the world.
This provision is expected to be maintained, despite the reluctance of some member states, according to the people quoted.
Discussions are ongoing and the measures could change when they are approved by the 27 countries. Under current proposals, the ban will fully exempt goods that do not originate in Russia, even if they transit through the country. This would free up oil from Kazakhstan or other third countries.
The EU proposal aims to ban oil imports to the bloc for the next six months and refined fuels in early January. European companies would be prohibited from providing “technical assistance, brokerage services, financing or financial assistance or any other services related to those prohibitions.”
The EU had offered Hungary and Slovakia until the end of 2024 to comply with the measures and the Czech Republic until June of the same year, since they depend heavily on Russian crude.
Bulgaria was also seeking a similar transition period, the people said.
The EU hoped to reach an agreement on Sunday to align with the G7 announcement to phase out Russian oil, ahead of the Victory Day parade in Moscow, which on Monday commemorated the defeat of Nazi Germany by the Soviet Union. In the Second World War.
The people said Hungary’s position was not political and that Budapest was seeking technical guarantees to ensure its energy security given the country’s dependence on Russian supplies.
Hungarian Prime Minister Victor Orbán has said his country needs more time
and investments to make the transition. Diplomats remain confident that an agreement can be reached in the coming days.
One of the people said that, in addition to the importance of supplies from Kazakhstan, guarantees on investments needed to finance the transition away from Russia are also central to the discussion, including for infrastructure in Croatia.
The current discussions on oil have made the rest of the measures
that the EU has proposed as part of its sixth sanctions package are also in limbo.
Other measures include the exclusion of more Russian banks from the SWIFT international payment system, including Russia’s largest lender, Sberbank; restrict entities
and Russian individuals buying properties in the EU; and a ban on providing consulting services to Russian companies.
INTERNATIONAL WRITING
*With information from BLOOMBERG
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