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“The most serious thing is the ceiling on oil prices”: an economist explained how dangerous the eighth package of EU anti-Russian sanctions is

The sale of oil by Russia at prices not higher than the established ceiling is a new EU sanction.

The sale of oil by Russia at prices not higher than the established ceiling is a new EU sanction.

A photo: REUTERS

BAG OF PACKAGES

“Ah, sanctions again…” – the average Russian consumer will yawn and go on about his business. Indeed, we are beginning to get used to the introduction of more and more Western sanctions. The European Union usually accepts them in packages. And the sanctions announced on October 6, 2022 are already eighth packageadopted after February 21 (on this day, Russia recognized the LNR and the DNR as independent states).

The contents of the package came as no surprise to anyone – most of the new restrictive measures were widely discussed. The package turned out to be large and weighty, so we list only the most important, in our opinion, prohibitions from it:

– for the sea transportation of crude oil and oil products from the Russian Federation and the provision of services related to their sea transportation to third countries (that is, not to the EU), if its price is higher than the established upper limit of oil prices;

– for imports from Russia of goods for a total of 7 billion euros: steel products, plastics, cigarettes, wood pulp, paper, cosmetics, etc.;

– for export to the Russian Federation of coal, electronic components and technical products that can be used in the production of weapons and aviation;

– for the provision of financial services to the Russian Federation, consultations in the field of information technology and other business services;

– a ban on operations with the Russian Maritime Register of Shipping;

– Restrictions have also been introduced against individuals and legal entities involved in the organization of referendums, as well as against representatives of the defense industry and persons “spreading misinformation”.

It is not yet clear how exactly the measures announced by the European Union will be implemented. In particular, how exactly the EU intends to ensure the sale of oil by Russia at prices not higher than the established ceiling. And what is that ceiling?

“THE DISASTER WILL NOT BE”

Which of these sanctions could hit the Russian economy more painfully, KP.RU asked an economist Denis Raksha.

“In order to make predictions about how sanctions from the eighth package of the European Union may affect us, we need to carefully study the wording and specific details of the restrictions being introduced,” the expert says. – But preliminary it can be argued that the new restrictions will not have a catastrophic impact on the Russian economy. For example, a 7 billion euro ban on the import of Russian goods is a very small amount (the trade turnover between Russia and the EU in 2021 amounted to $282 billion, – Ed.). Of course, for specific manufacturers of steel products, plastics, textiles, etc., which will be affected by the ban, this is very serious, but the measure will not be a big blow to the economy as a whole.

According to the economist, the oil price ceiling is the main reason why everything was started.

– But here it is necessary to pay attention to the position of the USA, – says Denis Raksha. – Namely, to the statement of the director of the Office of Foreign Assets Control (OFAC), which he made just the other day: the United States will not impose secondary sanctions on buyers of Russian oil who purchase raw materials at a price above the limit. That is, they understand that it will be difficult to survive without Russian oil now. I think that the European Union will adhere to the same position, although there is a punishment clause for participants in schemes to circumvent EU sanctions.

In addition, we do not yet know how the price ceiling for Russian oil can work, how it can be provided. In addition, Russia immediately made a statement that it would not supply oil to countries that would support the introduction of the ceiling. And how to calculate this ceiling? Someone will count in dollars, and someone in rubles – there are plenty of options. So there are a lot of statements now, but it is very difficult to say what we will see in practice. There is a lot of fog right now.

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