The EU has watered down the most recent round of proposed sanctions targeting Russia’s energy sector. The bloc has dismissed the plans to prevent EU-owned vessels from transporting oil from Russia to countries located outside the region, per the people who have knowledge of the matter mentioned in a Bloomberg report on Monday.
During the last week, the EU declared an embargo meant to prevent imports of Russian crude along with other types of refined products within six months. There were, however, exceptions from the measures adopted for some of the land-locked member nations, like Slovakia and Hungary, that depend almost entirely on shipments via the pipeline.
Additionally, the draft legislation recommended that the EU would clamp down on Russia’s oil exports being transported anywhere around the world by forbidding loading, financing, shipping, and insuring such cargoes.
After a weekend of strenuous pushback and negotiations with Greece, which ships more of Russia’s oil than any other EU nation, European lawmakers have softened the approach, reports Bloomberg. They decided to do away with the ban on the transport of oil but chose to retain the proposed limitations for insurers.
Brent crude futures extended their earlier losses on Monday, dropping by about 2.3% on the day to almost $109.84 per barrel. In the meantime, WTI futures lost about 2.5% to trade at about $107.03 per barrel.
Existing European sanctions have been able to shut about one million barrels per day of Russian crude oil out of the market. That has left it seeking out buyers elsewhere, especially in China and India, where refiners can snap up Urals crude at almost rock-bottom rates.
The EU accounts for nearly half of all of Russia’s roughly seven million barrels of daily in its oil exports, and the embargo means it can eliminate the supply in the next six months.
Limiting the restriction to insurance will still result in a significant obstacle to Russia’s oil exporters. Coverage extends to anything starting from delays owing to distressing weather, to lethal oil spills and environmental as well as major personal hazards. EU restrictions would possibly severely limit providers who desire to step up and offer insurance.