If representatives fail to reach consensus on the sanctions by 15 July, the price cap on Russian oil will be automatically adjusted upwards, potentially rising to $58 per barrel—a situation Brussels finds undesirable.
The European Union is approaching the final phase of discussions to finalize a new set of sanctions against Moscow, while nations seek to prevent a politically damaging increase of the Russian oil price cap.
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According to the regulations, the price cap, now fixed at $44.10 per barrel, must be recalibrated automatically every six months to maintain a 15% discount relative to the average market price.
The upcoming adjustment is due on 15 July.
Following the spike in Russian oil prices after the closure of the Strait of Hormuz, this reassessment is expected to elevate the cap significantly, likely reaching $58 per barrel, which would ease pressure on the Kremlin amid increasing economic challenges and Ukraine’s advance on the battlefield.
The European Commission sees this outcome as undesirable and has suggested postponing the revision until January next year to keep the cap at $44.10 per barrel.
«It is necessary to enforce the strictest sanctions possible, including maintaining the price cap,» Energy Commissioner Dan Jørgensen stated to Euronews. «There is no intention to relax or reduce pressure on Russia in any manner.»
Nevertheless, Malta, Cyprus, and especially Greece—three states with significant maritime industries—have questioned the proposal to delay the review.
«The oil price cap, introduced by the G7, aims not only to curb Russia’s revenue from fossil fuel exports but also to maintain stability within global energy markets. This goal is particularly pertinent given the current Middle East crisis,» explained a diplomat.
«Hence, any modifications to the automatic pricing mechanism must be carefully coordinated with G7 partners.»
Complicating matters further, the oil price cap forms part of a larger sanctions package, which Brussels intends to ratify in its entirety through unanimous agreement.
Diplomatic talks on Wednesday yielded no definitive outcome, with another session scheduled for Friday afternoon. Some diplomats reject the proposal for an emergency meeting on Sunday to finalize the package before the 15 July deadline.
«We are close to agreement,» said another diplomat. «The hope is for a final discussion on Friday.»
From Bacalhau to Kirill
Key issues remain open.
Portugal and Germany have expressed strong reservations concerning a proposed embargo on Russian cod and pollack, respectively, since both countries are substantial consumers of these fish species and face risks to their local industries.
In Portugal, this issue is especially sensitive due to cod, or bacalhau, being a national staple with centuries-old culinary traditions that support a significant economic sector.
Both nations have engaged with the European Commission to craft a phased import reduction strategy for cod and pollack to lessen supply chain disruptions. Germany has found a workable solution, while Portugal continues searching for one.
Additional challenges include a ban on selling LNG carriers to Russia and allowing Russian LNG transit through EU waters, as well as a stringent entry ban on Russian military personnel opposed by France and Italy.
The most recent compromise narrows the entry ban to short-term visas and targets only those individuals who directly participated in the full-scale invasion of Ukraine.
The greatest hurdle lies with Bulgaria.
This country, which has recently undergone a government change, firmly opposes sanctions on Patriarch Kirill, the leader of the Russian Orthodox Church, and Vagit Alekperov, a billionaire oligarch linked to Lukoil.
Sofia’s objections include religious concerns regarding Kirill and a €3 billion compensation claim filed by Lukoil against the Bulgarian state connected to Alekperov. Prime Minister Rumen Radev has publicly drawn a firm boundary.
For now, both contested names remain in the preliminary sanction list, yet diplomats anticipate their removal to preserve unanimous approval.
Should ambassadors fail to agree on the comprehensive sanctions package, they may opt to separate it, pushing through the most urgent item—the price cap—and postponing discussion on the more divisive elements.
This article has been updated to include remarks from Dan Jørgensen.