The European Commission has proposed a significant revision to the existing price cap on Russian seaborne crude oil, suggesting a reduction from $60 to $45 per barrel.

This proposal is part of a larger package of sanctions aimed at increasing economic pressure on Russia in response to the ongoing conflict in Ukraine.

European Commission President Ursula von der Leyen stated, "Oil prices have gone down, so we need to adapt to the changed market conditions," emphasizing the necessity of aligning sanctions with the current pricing environment.

This adjustment forms a crucial aspect of the 18th round of sanctions, which also targets the operation of the Nord Stream gas pipeline infrastructure, as well as Russian vessels known as the 'shadow fleet' that circumvent existing trade restrictions.

Under the proposed sanctions, EU member states would need to reach unanimous agreement to implement the new price cap, a process complicated by the opposition voiced by Hungary and Slovakia.

In discussions around the sanctions, EU officials expressed a desire to gain support from the United States, particularly in light of previous disagreements during G7 finance minister meetings earlier in the year.

Efforts are underway to achieve a political agreement on this new price cap ahead of the G7 summit scheduled for June 15-17 in Canada, where key global economies, including India, Brazil, and Mexico, have been invited to participate.

David O’Sullivan, the EU sanctions envoy, indicated that achieving consensus within the G7 would be the preferred route for implementing the new oil price cap.

He underscored the importance of presenting a united front against Moscow, although he acknowledged the complexities introduced by differing national interests.

The new sanctions package aims to escalate efforts to dismantle Russia's shadow fleet by targeting an additional 77 companies involved in managing or operating these vessels, with several firms based in the United Arab Emirates, Mauritius, and Hong Kong among those affected.

The intention behind these measures is to heighten operational costs for Russia and undermine its energy export revenues.

Moreover, the sanctions package is expected to include additional restrictions on 22 firms from countries such as China and Belarus that actively support Russia's military operations in Ukraine.

This effort aligns with the EU's broader strategy to reinforce its sanctions framework and ensure compliance across member states.

Further ramifications of the sanctions will extend to the Nord Stream pipelines, both of which have been inactive since 2022 due to previous explosions but will be formally excluded from the EU's energy infrastructure.

This move aligns with von der Leyen’s commentary that there can be "no return to the past" regarding the usage of these energy channels.

The proposed measures will also add to the existing sanctions lists, increasing the total number of individuals and entities sanctioned since early 2022 to over 2,500, reflecting the EU's ongoing commitment to responding to Russia's actions in Ukraine.

Officials hope the new sanctions package will be finalised by the end of July.