EU dispute over new oil price limit: Slovakia demands gas securities!

EU dispute over new oil price limit: Slovakia demands gas securities!

In recent weeks, the situation surrounding the planned new sanctions against the Russian oil industry within the European Union has proven to be extremely complex. In Brussels, the 27 member states are tirelessly discussing the 18th sanctions package, but progress is anything but guaranteed. How Energy News reports, there are significant differences in opinion about the proposed price cap for Russian oil exports, leading to a standstill in negotiations.

The current price cap for Russian oil is $60 per barrel. However, the European Commission has proposed lowering this to $45 to further restrict Russia's financial resources for the Ukraine war effort. But Slovak Prime Minister Robert Fico has so far announced the use of a veto and is demanding additional guarantees regarding gas supplies from the EU before giving his consent. From the AFP news agency According to him, Slovakia's concerns are not unfounded, as the country is heavily dependent on Russian gas.

Challenges and strategies

Another obstacle in the ongoing talks are the concerns of countries such as Cyprus and Malta. These states have doubts about the possible negative impact of a reduced price cap on their merchant fleet, which further complicates the discussions. According to the Energy News Many EU states are struggling with the balance between economic interests and the need to counter Russian aggression.

To counteract this, the Commission is planning flexible adjustments to the price cap based on international market prices. This could help to accommodate member states that are particularly reliant on Russian energy supplies, while at the same time further reducing the Russian government's cushioned revenues. Interestingly, international observers report that Russian oil revenues have already fallen by 30 percent since the previous price cap was introduced.

The fleet of “ghost tankers”

However, in addition to the financial restrictions, the Russian government has responded to the sanctions by building its own “ghost fleet” of over 500 tankers. These ships operate outside official regulations, making it difficult for the EU to enforce sanctions. Therefore, the EU plans to add 70 more of these ships to its blacklist, which already includes 342 Russian tankers. As shown by a report on energy consumption, this approach could significantly undermine the EU's efforts.

But as the EU struggles to reach an agreement, some countries, particularly in Central and Eastern Europe, have continued to increase their gas imports from Russia. In May 2024, imports rose to 2.5 billion cubic meters, an increase of 25% compared to the previous year. These developments could further exacerbate the EU's dilemma, as many countries remain dependent on cheaper Russian energy supplies.

Given all these challenges, it remains to be seen how the negotiations surrounding the new price cap for Russian oil will continue. The next meeting will show whether EU members can overcome their differences or whether the woes of individual countries will further hinder progress.