EU Commission proposes Russian diamond ban, tightening of oil price cap

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The European Commission has proposed a ban on imports of diamonds and liquid petroleum gas from Russia and also to tighten implementation of a price cap on Russian oil as part of new sanctions against Moscow, EU diplomats said on Wednesday.

The 12th sanctions package, that the European Union’s 27 member countries will discuss on Friday, also contains a ban on the transit through Russia of goods and technologies that could boost the country’s industrial capabilities, plus import bans on a number of metals.

Agreement on a final package is expected to take weeks as a deal will require unanimous backing of all 27 EU states.

The proposal includes a ban on direct diamond imports from Russia from Jan. 1, 2024 and the implementation from March of a traceability mechanism that would prevent imports of Russian gems processed in third countries, the EU diplomatic sources said.

The traceability mechanism is meant to be coordinated with G7 countries, including the United States, Canada, Britain and Japan.

To tighten the implementation of the oil price cap, set by the G7 at $60 per barrel of crude, the proposal calls for shipping companies to detail shipping and insurance costs for the Russian oil cargoes they carry.

The price cap is now widely bypassed by Russia’s shadow fleet of tankers, according to shipping analysts.

“The logic of imposing more transparency is to prevent shipping companies from hiding the real price of the oil carried by the tanker by merging it with shipping and insurance costs,” one EU diplomat said.

To prevent Russia from further expanding its shadow fleet, the EU Commission has put forward export controls on tankers, old and new, to Russia. It was not clear if major shipping countries like Greece or Cyprus would agree.

The Commission said in a statement that the package would have new import and export bans, actions to tighten the oil price cap and to counter circumvention of EU sanctions and target actors from the Russian military, defence and IT sectors, as well as other important economic operators.

The Financial Times reported that Denmark will be tasked with inspecting and potentially blocking Russian oil tankers sailing through its waters under new EU plans to enforce the cap on Russian oil.

The paper said Denmark would target tankers transiting through the Danish straits without Western insurance, adding that all of Russia’s oil shipped through the Baltic Sea, or roughly 60% of its total seaborne exports, crosses the Danish straits on its way to international markets.

The Commission had no comment on the FT report.

An EU official, speaking on condition of anonymity, said that the sanctions proposal did not put any new obligations on Denmark in terms of price cap enforcement and several EU diplomats said there was no mention of Denmark or any ship inspections in the Commission proposal.

The proposal also broadens the list of goods that cannot be sold to Russia because they could help Moscow’s war against Ukraine, and bans the sale of software for managing companies and for industrial design and production, diplomats said.

If approved, the Commission said the proposal would also “sanction over 120 additional individuals and entities for their role in undermining sovereignty and territorial integrity of Ukraine.”

(By Jan Strupczewski; Editing by Alexandra Hudson and Jane Merriman)


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