The European Union is considering including shipping restrictions to its oil sanctions as the bloc continues to discuss imposing a price cap on Russian oil, Bloomberg reported, citing sources.
The shipping ban would prohibit EU ships from carrying Russian oil sold above the agreed threshold. Greece is by far the largest oil tanker-owning country in the world.
The current EU oil sanctions, which were agreed upon in June, include an embargo on Russian offshore oil, a ban on services such as insurance, brokering and financing needed to transport oil around the world, and exemptions for pipeline shipments. The package is due to take effect in December for offshore oil and early 2023 for petroleum products.
Shipping was excluded from the previous package after pressure from shipping countries, including Greece and Cyprus, meaning that ships that do not depend on EU services could theoretically continue to transport Russian oil outside the EU.
According to one source, the inclusion of shipping restrictions is necessary to avoid any potential loopholes and to negotiate a price ceiling with the G7. Vessels operated by Greece continued to carry Russian coal to non-EU countries even after EU sanctions on the commodity took effect.
Earlier this month, G7 ministers approved a price cap on Russian oil.
According to sources, the EU will need to modify its previous sanctions to allow delivery and services within an agreed price cap. These changes would require the support of all 27 member states. Other G-7 members, including the U.K., which has a significant segment of the insurance industry, will adopt similar measures.
Several details remain to be worked out, including at what price allies will set the limit. The previously adopted EU limits go into effect Dec. 5, but could affect physical oil trade long before then because of the time it takes to hire ships and get cargo to its destination.
According to one source, EU countries that have received preferential treatment for oil coming through pipelines will likely want to ensure their integrity, while countries that import oil by sea may express concerns about an uneven playing field. Carrier countries will also look for ways to protect their industry, the source said. Hungary has said it will no longer support energy sanctions.
It remains unclear how effective the price-cap regime will be, especially since some of Russia's biggest buyers, including China and India, have been reluctant to join. U.S. officials have argued that the price cap could work even if many buyers do not formally join the coalition, since they can still use the system as leverage in contract negotiations with Moscow to negotiate lower prices.
Separately, EU countries are also discussing new sanctions against Russia this week, including further restrictions on exports of electronics and technology.