EU Plans Comprehensive Ban on Russian Crude Maritime Services, Requiring Coordination with G7

Reporting from our correspondent — On Thursday, EU Sanctions Envoy David O’Sullivan stated that the EU plans to impose a comprehensive ban on maritime services for Russian crude oil, but the plan must be coordinated with the Group of Seven (G7) — an international organisation consisting of the world’s most developed economies — before it can be advanced. It is understood that O’Sullivan made the above remarks at a press conference held in Kyrgyzstan, with the relevant news reported by Reuters.

Earlier this month, the European Commission formally proposed a comprehensive ban on maritime services for Russian crude oil as part of its 20th proposed sanctions package against Russia. European Commission President Ursula von der Leyen pointed out that the core purpose of this move is to "further reduce Russia’s energy revenues and make it harder for its oil to find buyers". She added, "Since the shipping industry is a global sector, we propose implementing this comprehensive ban jointly with like-minded partners once the G7 has made a decision", highlighting the importance of international coordination for the ban’s implementation.

O’Sullivan further revealed that representatives from the EU and the G7 will hold specific discussions on the plan to comprehensively ban maritime services for Russian crude oil in the coming weeks. He emphasised that the EU is still continuously implementing the price cap policy on Russian crude oil, and the cap has recently been lowered: "I believe the EU has made it clear that we are currently still implementing the oil price cap, which has recently been reduced to $44 per barrel."

It is understood that the EU officially launched a new automatic and dynamic price adjustment mechanism in January this year, specifically designed to adjust the price cap on Russian crude oil — an important measure to optimise the EU’s energy sanctions against Russia. Under this mechanism, the price cap will always be 15% lower than the average market price of Russia’s flagship Urals crude oil over the previous 22-week reference period. The new cap calculated accordingly is $44.10 per barrel, which came into effect on 1 February and is uniformly stated as $44 per barrel in practical implementation.

Under the framework of the current price cap mechanism, Western companies can only provide maritime transport and related supporting services for Russian crude oil if its selling price is at or below the cap. O’Sullivan stated, "Russia’s oil and gas revenues have dropped significantly in recent months, and we will continue to adhere to this policy", indicating that the existing sanctions have achieved certain results.

Notably, if the EU ultimately imposes a comprehensive ban on maritime transport services for Russian crude oil, the currently implemented price cap mechanism will completely lose its practical effect. In fact, the effectiveness of the mechanism has not met expectations, with the core reason being that Russia has diverted a large volume of its oil exports to its "shadow fleet" and various trader networks to evade Western sanctions and maintain crude oil export volumes. It is reported that Russia’s "shadow fleet" is mainly composed of old oil tankers, which evade supervision by turning off satellite transmitters and changing ship flags, and currently undertakes most of its oil export transportation tasks.

Industry analysts believe that the EU’s promotion of a comprehensive maritime services ban is essentially a further escalation of energy sanctions against Russia, and the outcome of coordination with the G7 will directly determine the scope and effectiveness of the ban. Currently, discussions on the ban among various parties are still ongoing, and its eventual implementation may have a profound impact on the global energy market pattern and Russia’s crude oil export channels.