EU Proposes Stricter Sanctions on Russian Oil to Undermine Kremlin Funding

The European Union plans to implement new sanctions designed to cut off additional funding sources for the Kremlin’s war effort in Ukraine by proposing to reduce the price cap on Russian oil. EU foreign policy chief Kaja Kallas announced the intention to lower the current cap from $60 to $45 per barrel, a move expected to significantly impact Russia's oil revenue.

This new strategy includes further sanctions on the Nord Stream gas pipelines, which have been out of operation since their sabotage in 2022. Kallas emphasized that these measures signal a firm stance against returning to prior business interactions with Russia. The implementation of these sanctions will require unanimous agreement from all 27 EU member states.

In 2023, Western allies set the price cap at $60 per barrel, but with many of Russia's oil supplies priced lower, it was largely symbolic. Nonetheless, the cap was established to counter potential rises in oil prices. Oil revenue is crucial for Russia's economy, providing essential funds for military operations while simultaneously managing inflation and currency stability domestically.

European Commission President Ursula von der Leyen indicated that discussions to finalize the price cap reduction will occur among the G7 leaders in June. She remarked that the significant drop in oil prices has raised questions about the effectiveness of the current cap, prompting the push for a reduction to $45 per barrel.

Moreover, the EU aims to target Russia's banking sector to diminish its financial capabilities by placing additional sanctions on approximately 22 banks. Other measures will include an export ban costing around €2.5 billion and the freezing of assets belonging to over twenty companies linked to supporting Russia’s military endeavors.

Von der Leyen expressed the overarching goal of these sanctions is to compel Russia to engage seriously in peace negotiations with Ukraine, emphasizing the need for a real ceasefire and a substantial proposal from the Kremlin. Since the invasion began in February 2022, the EU has enacted multiple rounds of sanctions against Russia, impacting around 2,400 individuals and entities associated with the government and its economy.