BOFIT Viikkokatsaus / BOFIT Weekly Review 2022/23

On June 3, the European Union announced its sixth round of sanctions that included significant new import bans and export restrictions. With a few small exceptions, seaborne imports of Russian crude oil and petroleum products to EU countries fill be forbidden. While pipeline imports of oil remain outside the sanctions regime for the moment, Germany and Poland, the two biggest importers of Russian oil in the EU, have announced they are voluntarily terminating their Russian oil imports by the end of this year. The EU’s ban on crude oil imports enters into force on December 5, and the ban on petroleum products on February 5, 2023. The ban on imports of coal from Russia, decided already in April in conjunction with the EU’s fifth sanctions package, goes into effect in August. Imports of natural gas from Russia have yet to be subject to EU sanctions.

The import ban has been reinforced by a complete ban on the purchase, transfer, and financing of oil and oil products that originate in Russia, as well as a ban on insuring maritime transport of Russian oil. With the participation of UK, the ban on insuring and reinsuring Russian oil shipments makes it very difficult to insure any tankers carrying Russian oil globally. The new restrictions also extend to exports of various business services and certain chemical products. The purpose for banning imports of Russian oil and imposing export restrictions is to reduce Russia’s export earnings and federal budget revenues, and ultimately degrade Russia’s ability to continue its war of aggression on Ukraine.

The EU also decided to prohibit provision of payment transmission services to three Russian banks (Sberbank, Rosselkhozbank and Credit Bank of Moscow). The decision implies that these banks will be cut off from the SWIFT financial messaging system for international payments.

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