G7 and EU set to deliver economic blow to Russia with toughest sanctions yet
New Delhi (The Uttam Hindu): The world's richest democracies, the G-7 countries, and the European Union are preparing to strike the biggest and most decisive blow to Russia's oil trade. Western countries are planning to impose a complete ban on maritime services for Russian crude oil. This move will make it impossible for Western ships and insurance companies to do any kind of business with Russia, which is expected to have a deep impact on Russia's economy. A Reuters report, quoting six sources, claims that this decision will directly impact ships from European countries like Greece, Cyprus, and Malta that are still exporting Russian oil.
This new, tougher sanction will eliminate the existing price limit system. Its purpose is to completely disrupt Russia's profitable maritime trade with Western-owned tankers. It's worth noting that Russia still supplies more than a third of its oil through Western ships and services, with most of it going to India and China. The closure of these routes will force Russia to rely entirely on its old and dilapidated "shadow fleet." The shadow fleet is a network of hundreds of tankers that operate covertly to evade sanctions and are extremely difficult to monitor.
This proposal is being considered for inclusion in the EU's next sanctions package, expected in early 2026. Brussels is awaiting G-7 approval before formalizing this decision. According to sources, British and American officials are rapidly advancing this discussion at G-7 meetings. However, the final US stance on this issue will depend on the strategy of President Donald Trump's administration. Since Trump is currently mediating Ukraine-Russia peace talks and has previously shown little interest in further tightening the price limit system, his decision will be crucial. If approved, this proposal would be the toughest action taken by the G-7 and EU on Russian oil since the Ukraine war began in 2022.
According to data from the Center for Research on Energy and Clean Air, in October, Russia exported 38 percent of its oil through tankers belonging to G-7 and EU companies. Meanwhile, the "shadow fleet" used by Russia, Iran, and Venezuela to evade sanctions now includes 1,423 tankers. Western governments argue that this move aims to reduce the Kremlin's war revenue while maintaining stability in the oil market. If this complete maritime embargo is implemented, Russia will be left with no choice but to either expand its illicit fleet or drastically cut its oil exports.