Cyprus challenges EU Russian oil cap

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Cyprus, Greece, and Malta have raised concerns about the need to ensure a level playing field in implementing a cap on the price of Russian oil transported by ship to third countries, EU sources told CNA.

Similar concerns have been raised from the beginning of consultations on the measure, which is a part of the eighth package of EU sanctions against Russia for invading Ukraine.

The measure is an initiative of the G7 in coordination with the European Union.

However, there have been disagreements on setting the price ceiling of oil above which it will be prohibited to insure its transport by EU-flagged vessels.

The member states discussed the issue on the level of permanent representatives (COREPER) this week.

The measure is due to take effect on December 5.

According to multiple sources, the main disagreements come from the Baltic states and Poland, who consider the proposed cap (between $65-$70) to be too high, thus leaving a significant margin of profit for Russia.

Cyprus, Greece and Malta, countries with an important maritime sector, have said that the cap is too low and calls for compensatory measures or a longer adjustment period.

EU sources told CNA that concerns of the three countries were also raised at the start of the discussion and included the need for clarity on how the risk of non-compliance will be avoided and which compensatory measures will be placed concerning the deletion of ships from their registers after the implementation of the package.

The legal framework for imposing a cap on Russian oil that can be transported to third countries with EU-flagged vessels was adopted by the EU Council in early October as a part of the eighth package of sanctions against Russia.

According to a document by Bloomberg, the bloc proposed adding a 45-day transition to the introduction of the cap.

The proposed grace period would apply to oil loaded before December 5 — the date oil sanctions are due to kick in — and unloaded by January 19, aligning the EU to a clause previously announced by the US and the UK.

The latest proposal eases several elements of the cap laid out in the bloc’s most recent sanctions package, including ones that could have placed indefinite restrictions on ships that carried Russian oil above the price cap.

Instead, penalties on those ships would now be limited to 90 days and apply only to Russian oil.

The cap would ban companies from providing shipping and services, such as insurance, brokering and financial assistance, needed to transport Russian oil anywhere in the world unless the oil is sold below the agreed threshold.