Русский
Update: 11th June 2025
The Russian President, Vladimir Putin has extended a ban on Russian oil companies selling their products at the price cap issued by the EU yesterday. It prohibits the sale of Russian oil and petroleum products to foreign legal entities and individuals if contracts stipulate the terms and conditions of the price cap set by the United States, the EU and other countries. The purpose of the price cap for Russian oil and oil products is to limit Russian budget revenues from the sale of energy, while maintaining supply of oil and oil products to the world market.
The Kremlin considers the price cap to be a non-market instrument. Companies and individuals who have concluded supply contracts are obliged not to allow the presence of price cap provisions in contracts and addenda to them. Russian exporters must monitor the non-compliance of the price cap to the end customer.
These are the EU’s 18th round of sanctions, as just announced by Von der Leyen:
- Oil price cap at US$45 a barrel. The coordination of this still has to be worked out.
- Another 77 vessels sanctioned;
- An EU ban on imported, refined Russian oil products.
The issue is really if China and India will abide by the EU cap. At present they have been buying Russian crude at just above the existing cap (so technically breaking sanctions). at US$65 per barrel. The EU is betting here that China and India will agree, but the danger is if Russia resists. That means pressure will come from China and India to the EU. That could mean a trade war—both export large quantities of electronics to Europe. Or they could just ignore the EU’s wishes and decide to sideline Brussels. That would mean a 19th round of EU sanctions would need to include China and India.
It also means that the EU is keen to lower still further Russian oil prices—not just because it wants to punish Russia but because it is running out of capital to purchase energy. Don’t be fooled by the intent—at US$45 a barrel, the EU would massively increase its purchases of Russian oil. So that’s the 18th round of sanctions.
But—the other issue—that will shortly be revealed—is that Russia will have war-gamed this and discussed this exact pricing scenario with Beijing and Delhi. US$45 a barrel is close to Russia’s production costs. There will be repercussions. We will soon see what those will be. It may not end well for Europe—just as they ought to be stocking up on the coming winter supplies. Our analysis is that this is a very risky move by Brussels. They’ve played a hand that Russia will already know how to react to.
Further Reading
Greek Shipping Owners Profiting From Russian Use Crude Oil Tankers
