Swedish Foreign Minister Tobias Billström has said that the new EU sanctions package against Russia will include restrictions on Russian LNG and the oil “shadow fleet.” He said this before a meeting of EU foreign ministers in Luxembourg.
EU states’ foreign ministers discuss the 14th package of sanctions
According to the Swedish minister, the 14th package of sanctions is one of the most important topics at the meeting of European ministers on April 22.
“Adoption of the 14th package of sanctions is one of the most important things; we intend to include a ban on imports of (Russian – Ed.) LNG and measures against the Russian “shadow fleet.”
Tobias Billström, Swedish Foreign Minister
At the same time, Tobias Billström emphasized that another important issue is the need for uninterrupted military supplies to Ukraine.
“To help the country that is now fighting for our freedom and security,” emphasized the Swedish Foreign Minister.
Earlier, Vice President of the European Commission Valdis Dombrovskis confirmed that the EU has started working on the next, fourteenth package of sanctions against Russia over its full-scale invasion of Ukraine.
According to media reports, the restrictions will apply to oil tankers, or the “shadow fleet,” that transport Russian oil despite sanctions that prevent them from doing so.
More ways to make sanctions on Russia effective and force it to stop the war
Although the current Western sanctions against Russia over its war aggression in Ukraine are unprecedented, they are not perfect and have not yet fulfilled their main objective of forcing Moscow to stop the invasion of Ukraine.
The Russian military-industrial complex has found cunning ways to circumvent some of Western sanctions and obtain parts for weapon production, although it has faced serious problems due to the restrictions imposed.
Experts have identified several issues with the EU and US sanctions against Russia and loopholes that help Russia circumvent the restrictions. In particular, they are talking about strengthening the oil embargo—lowering the ceiling on Russian crude oil—and stricter supervision and punishment of violators of the price cap, including companies and countries that cooperate with Russia’s “shadow fleet”.
In March, Yale professor Jeffrey Sonnenfeld, who was key in leading the campaign to penalize Russia for its war, and co-author Steven Tian, the director of research at the Chief Executive Leadership Institute, wrote an article criticizing an insufficient enforcement of Western sanctions against Russia and their omission of significant commodity exports. They recommend three strategies for Western decision-makers to follow to make a stronger impact on the Russian economy.
Last February, the US Treasury Department’s Office of Foreign Assets Control announced the second round of sanctions in 2024 for violating price restrictions on the maritime transportation of Russian oil.
The new US sanctions target four legal entities and one vessel involved in a scheme to violate the $60 per barrel price ceiling for Russian oil at the end of 2023. Three companies registered in the United Arab Emirates and one in Liberia were subject to the sanctions.
Oil Price Cap and sanctions evasion alert
On February 1, the Price Cap Coalition published an Oil Price Cap (OPC) Compliance and Enforcement Alert. The Alert, which is directed at both government and industry stakeholders, outlines examples of evasion technics to improve compliance measures, and instructs the members of the Price Cap Coalition on how to report suspected oil price cap breaches.
The enforcement alert identifies sanctions evasion methods that industry stakeholders need to diligently monitor. First, there are opaque shipping and extra costs as a result of attempts to conceal price, shipment, customs, and insurance fees.
Second, the use of a complicated supply chain, third-party middlemen, and shell firms to conceal the origin of Russian oil. It includes frequent changes in ownership of vessels.
Third, the use of Russia’s “shadow fleet,” made up of old vessels with hidden ownership that do not adhere to industry standards. Stakeholders must raise red flags in such cases and actively conduct due diligence to prevent Russia from evading the oil price cap.
Oil Price Cap to limit Russia’s ability to fund its war against Ukraine
The Western coalition adopted the Price Cap to limit Russia’s ability to fund its war against Ukraine through the sale of its oil. The Price Cap prohibits maritime providers from engaging with Russian-origin crude oil that exceeds $60 per barrel in price.
In December 2022, the Western coalition set an upper limit of $60 per barrel for Russian oil exports by sea. The sanctions also prohibit Western companies from providing oil transportation services from Russia at a price higher than the ceiling.
The restriction has forced Russia to reorient its oil sales to much more distant countries, such as China and India, and to invest in “shadow fleets” of worn-out tankers that are not officially tracked.
