BOFIT Viikkokatsaus / BOFIT Weekly Review 2022/49

The ban on seaborne shipments of Russian crude oil to EU countries went into effect on Monday (Dec. 5). The ban does not apply to crude oil transmitted by pipeline. Germany and Poland, the largest European buyers of Russian pipeline crude, have announced that they will also suspend their pipeline imports. A few EU buyers (Hungary, Czech Republic and Slovakia) will at least temporarily continue to import Russian pipeline oil. Most of EU crude oil imports from Russia, however, are now ending. Russia must find new buyers for about a quarter of its crude oil exports. The import ban on Russian petroleum products enters into force in February 2023.

The G7 countries also imposed a price cap on seaborne Russian crude. Under the agreement, maritime services related to the transport of Russian crude oil can only be offered for oil priced below the price cap. The price cap is currently set at 60 dollars a barrel, but could be revised later. Russian Urals-blend crude was already trading below the cap price before the cap entered into force. Russian officials have discussed countermeasures to address the price cap, but nothing has yet been decided. A similar price cap for petroleum products should enter into force in February 2023.

The European Commission this week proposed its ninth package of Russia sanctions. Among other things, the latest round names a number of Russian individuals, companies and banks not previously sanctioned, as well as further export restrictions. For example, the export of drone engines to Russia or potential third-country suppliers is banned. In addition, new export controls and restrictions particularly on dual-use products are planned, including chemicals and IT components.

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