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The European Union formally adopted on Friday the sixth package of sanctions against Russia, which includes a ban on seaborne Russian oil imports and a ban on maritime insurance for Russian oil going to third countries, which the EU expects will make it very difficult for Russia to ship its oil to the rest of the world.
For seaborne crude oil, spot market transactions and execution of existing contracts will be permitted for six months after the sanctions enter into force. For petroleum products, these will be permitted for eight months after entry into force, the European Commission said. The ban covers 90% of the current EU oil imports from Russia.
Because of its geographical exposure, Bulgaria was given a special temporary derogation until the end of 2024 to continue importing crude oil?and petroleum products via maritime transport.
EU member states highly dependent on Russian pipeline oil are also given a temporary exemption to import Russian crude via pipeline until the EU Council decides otherwise.
“However, Member States benefiting from this exemption will not be able to resell such crude oil and petroleum products to other Member States or third countries,” the Commission said.
These member states include Hungary, the Czech Republic, and Slovakia. For weeks, Hungary had blocked a decision on an embargo after the European Commission proposed a full ban by the end of the year on all Russian oil imports. The initial proposal was watered down to an agreement on a ban on seaborne imports by the end of the year, with pipeline crude exempted, for now.
Related: Where Are Oil Prices Headed?
In a much farther-reaching measure in the sanctions package, the EU also bans EU operators from insuring and financing the shipment of oil to third countries after a six-month wind-down period.
“This will make it particularly difficult for Russia to continue exporting its crude oil and petroleum products to the rest of the world since EU operators are important providers of such services,” said the Commission.
The UK is also highly likely to join the insurance ban after the UK and the European Union have reportedly agreed to jointly shut off Russia’s access to oil cargo insurance. The UK is home to an insurers’ club that covers 95% of the global oil shipment insurance market.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.