The European Union (EU) is deliberating a new set of sanctions against Russia in response to its continued invasion of Ukraine, which may include import restrictions on Russian aluminum and the gradual phase-out of liquefied natural gas (LNG) from the nation. The proposed sanctions, part of the EU’s 16th package, also include tighter controls on Russian oil shipments and expanded export restrictions on military-related goods, according to sources familiar with the discussions.
The proposed aluminum import restrictions would be implemented gradually, with the specifics of the scope and timeline still under review, according to sources who spoke on condition of anonymity. Similarly, the EU is exploring two potential approaches to ending imports of Russian LNG—either through sanctions or as part of a broader roadmap the EU’s executive body is expected to unveil next month.
While discussions on these measures are still ongoing, they represent a more aggressive stance by the EU against Russia. The package also includes sanctions aimed at further isolating Russian financial institutions, such as removing more banks from the international SWIFT payment system.
These proposals, which are still subject to approval and may change, are expected to be formally presented in the coming weeks.
Uncertainty Surrounds LNG Ban
The idea of banning Russian LNG has garnered significant attention, but EU member states are divided on how best to implement the measure. Some countries, particularly those still reliant on Russian energy supplies, are wary of such a ban. Hungary and Slovakia, for example, continue to rely on Gazprom for their gas needs. However, other EU countries, such as Spain, Belgium, and France, are more inclined to support sanctions against Russian LNG, especially as Europe has increasingly shifted away from Russian energy sources in recent months.
US and EU sanctions on Russian LNG projects have already been in place, but these efforts have not significantly reduced Europe’s reliance on Russian gas, which reached record levels in imports last year. The EU’s decision will likely depend on finding a legal framework that satisfies the competing interests of member states.
Impact on Aluminum Market
In addition to energy sanctions, the EU is considering restrictions on Russian aluminum imports. Prior to the invasion of Ukraine, Russia was a major supplier of aluminum to the European market, accounting for around 6% of imports. However, shipments have dropped significantly due to self-sanctioning by manufacturers and shifts in global supply chains. If the ban is enacted, the market impact will depend on whether alternative sources can be found to replace Russian aluminum.
China has increased its imports of Russian aluminum since the war’s onset, and analysts suggest that the effect on global markets will largely depend on the ability to reroute additional supply to other regions. In 2022, Russian aluminum shipments to Europe halved, as noted by Morgan Stanley analyst Amy Gower.
Wider Sanctions on Third Countries and Loophole Closures
In addition to direct sanctions on Russia, the EU is also exploring measures to target third-party countries such as China and the UAE, which have been helping Russia acquire technologies for weapons. The EU is also focusing on closing existing loopholes that allow Moscow to bypass sanctions.
Other measures being considered include higher tariffs on agricultural goods and fertilizers, along with stricter sanctions targeting Russia’s transportation sector. The EU is hoping to present these new sanctions next month, which will mark three years since Russia’s invasion of Ukraine.
The proposed sanctions package represents a significant escalation in the EU’s efforts to isolate Russia economically and politically, but member states remain divided on how far to go in cutting off critical supplies such as energy and raw materials.
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