The package of sanctions on Russia is the EU’s 18th since Moscow’s full-scale invasion of Ukraine in 2022

International News via Reuters:

European Union countries on Friday approved an 18th sanctions package against Russia over its war in Ukraine, aimed at dealing further blows to Russia’s oil and energy industry.

Here’s what you need to know:

OIL PRICE CAP

Central to the package is a lower price cap on Russian oil – a move designed to shrink Moscow’s energy revenues without disrupting global markets by severing Russian supply entirely.

The EU will impose a moving price cap on Russian crude at 15% below its average market price, EU diplomats said.

That means a cap of roughly $47.60 per barrel at present, well below the $60 maximum that the Group of Seven major economies have tried to impose since December 2022.

The measure aims to ban trade in Russian crude bought at a higher price by prohibiting shipping, insurance and reinsurance companies from handling tankers carrying such crude.

The European Union and Britain have been pushing the G7 to lower the cap since a fall in oil futures made the $60 cap largely irrelevant.

However, the United States has resisted, leaving the EU to move forward on its own, with only limited power to enforce the measure because oil is largely traded in dollars, for which payment clearing is controlled by U.S. banks.

SHADOW FLEET AND ENERGY TRADE

The EU will no longer import any petroleum products made from Russian crude, although the ban will not apply to imports from Norway, Britain, the U.S., Canada and Switzerland, EU diplomats said.

An additional 105 vessels are banned from accessing EU ports and locks, or undertaking ship-to-ship transfers of oil – an effort to shut down the so-called “shadow fleet” of older oil tankers used to transport Russian oil and circumvent sanctions.

In total, the EU has now imposed sanctions on more than 400 shadow fleet ships.

NORD STREAM

Transactions related to Russia’s Nord Stream gas pipelines under the Baltic Sea will be banned, including any provision of goods or services to these projects.

FINANCIAL SECTOR

The EU will ban all transactions with Russian financial institutions – already excluded from the global financial messaging system SWIFT.

The ban will include transactions with Russia’s sovereign wealth fund – the Russian Direct Investment Fund (RDIF) – as well as its investments.

This aims to further restrict Russia’s access to international financial markets and foreign currency.

EU countries also agreed to lower the threshold for imposing further sanctions on foreign financial and credit institutions that undermine the sanctions or support Russia’s war effort – for example, by circumventing the oil price cap.

EXPORT BANS, NEW BLACKLIST ENTRIES

The EU will blacklist 26 new entities for circumventing sanctions, including seven in China, three in Hong Kong and four in Turkey, diplomats said.

A number of chemicals, plastics and items of machinery have been added to the list of goods EU countries cannot export to Russia.

DELAYED APPROVAL

The package of sanctions on Russia is the EU’s 18th since Moscow’s full-scale invasion of Ukraine in 2022.

Approval was held up for weeks by repeated Slovakian and Maltese vetoes.

Slovakia had demanded guarantees against potential losses from a separate EU plan to ban imports of Russian gas by 2028, and only dropped its veto once Prime Minister Robert Fico said it had achieved as much as it could at this point.

Reporting by Kate Abnett, Milan Strahm; Editing by Kevin Liffey

Shares in Burberry, which have more than doubled since September, rose 4% in early trade

International News via Reuters:

Burberry’s sales fell by a less-than-expected 1% in the first quarter, as it benefited in the Americas and Europe from clearer brand positioning leaning on its British heritage, the luxury group said on Friday.

Shares in Burberry, which have more than doubled since September, rose 4% in early trade.

Known for its trench coats and check pattern scarves, Burberry is using its British heritage to win back customers under the leadership of CEO Josh Schulman, who took over exactly a year ago, and the company said its summer campaigns had broadened its appeal.

“Highgrove”, inspired by the garden of the private residence of King Charles, resonated with luxury customers, Schulman said, while “Festival”, based on music festivals like Glastonbury and featuring bucket hats and boots, targeted young customers.

Comparable sales returned to growth in Europe, the company said, while trading in the Americas strengthened. Sales fell in China and in the rest of Asia, but the rate of decline was around half that seen in the previous quarter.

“The improvement in our first-quarter comparable sales, strength in our core categories, and uptick in brand desirability give us conviction in the path ahead,” Schulman said, adding that the autumn collection was being “well received”.

Burberry said it was seeing reduced activity from tourists, but stronger demand from new and existing customers helped offset the impact.

“We are really pleased with the sequential improvement that we are seeing across the regions and particularly the shift to positive comps in America and EMEA,” he told reporters.

“It’s a tough macro out there and we’re taking things step by step but we are optimistic about the quarters ahead.”

Burberry, which has issued several profit warnings in recent years, is cutting a fifth of its global workforce, a radical cost-cutting measure that investors have welcomed.

The 1% drop in overall comparable retail sales in the first quarter, which ended on June 28, beat analysts’ forecasts for a 3% decline in a company-compiled consensus, and improved on a 6% fall in the previous quarter.

Analysts at Citi said the brand had reported its third consecutive quarter of improvement since Schulman launched its new strategy last November, implying comparable sales could turn positive in the current quarter.

“In a quarter marked by further macro and geopolitical pressures and weaker tourist spending in Europe and Japan, Burberry has likely held up better than peers quarter-on-quarter,” they said.

Reporting by Pushkala Aripaka in Bengaluru and Helen Reid and Paul Sandle in London; Editing by Subhranshu Sahu, Susan Fenton, Elaine Hardcastle

The company’s Facebook and Instagram social media platforms have been banned in Russia since 2022

International News via Reuters:

WhatsApp should prepare to leave the Russian market, a lawmaker who regulates the IT sector said on Friday, warning that the messaging app owned by Meta Platforms is very likely to be put on a list of restricted software.

Russian President Vladimir Putin last month signed a law authorising the development of a state-backed messaging app integrated with government services, as Moscow strives to reduce its dependence on platforms like WhatsApp and Telegram.

Anton Gorelkin, deputy head of the lower house of parliament’s information technology committee, said in a statement on Telegram that the state-backed app, MAX, could gain market share should WhatsApp, used by 68% of Russians each day, leave.

“It’s time for WhatsApp to prepare to leave the Russian market,” Gorelkin said, noting that Meta is designated as an extremist organisation in Russia.

The company’s Facebook and Instagram social media platforms have been banned in Russia since 2022 when Moscow sent tens of thousands of troops into Ukraine.

Meta did not immediately respond to a request for comment.

NATIONAL SECURITY THREAT

Anton Nemkin, a member of the parliament’s IT committee, said WhatsApp’s fate in Russia was predetermined.

“The presence of such a service in Russia’s digital space is, in fact, a legal breach of national security,” the TASS news agency quoted Nemkin as saying.

Asked if WhatsApp might leave Russia, Kremlin spokesman Dmitry Peskov said all services must abide by Russian law.

Russia has long sought to establish what it calls digital sovereignty by promoting home-grown services. Its push to replace foreign tech platforms became more urgent as some Western companies pulled out of the Russian market after 2022.

The Kremlin this week published a list of instructions from Putin, including an order to introduce additional restrictions on the use in Russia of software, including communication services, produced in so-called “unfriendly countries” that have imposed sanctions against Russia.

Putin gave a deadline of September 1. Gorelkin, referring to Putin’s order, said WhatsApp was likely to be among those communication services restricted.

Gorelkin said he expected Telegram, founded by Russian-born Pavel Durov, to avoid being banned, provided it complies with Russian law.

Telegram has started the procedure for creating a Russian legal entity, according to an update from state communications regulator Roskomnadzor this week.

Reporting by Reuters; Writing by Alexander MarrowEditing by Andrew Osborn and Elaine Hardcastle

Ambassador Thomas Hans Ossowski said the new rules would help address Turks’ complaints over long bureaucratic processes

International News via Reuters:

The European Union has eased rules for Turks to use its open-border Schengen area, the bloc’s ambassador to Ankara said on Friday, calling for the urgent revival of negotiations on visa-free travel for Turks.

For years, Turks have complained about the EU’s visa system. The EU has said the processes – managed by accredited visa agencies – have been slow due to the high number of applications and that it is discussing possible workarounds with Ankara.

Ambassador Thomas Hans Ossowski said the new rules would help address Turks’ complaints over long bureaucratic processes, but warned it was not enough to permanently solve the problems.

“It will be much easier and much faster for Turkish citizens,” Ossowski told reporters in Ankara, referring to the European Commission’s new decision, in effect since July 15, simplifying the path to multiple-entry visas for Turks.

Turks who previously used visas correctly will be eligible for a six-month visa as early as their second application, followed by one-year, three-year and five-year multiple-entry visas.

Turkey has been an EU membership candidate since 1999 but its accession process has been frozen for years over issues ranging from human rights to democratic backsliding. There have recently been signs of increased engagement and economic cooperation.

Ossowski said the EU had for more than a decade offered Turkey the prospect of visa-free travel and stressed the need to return to the liberalisation process.

“Every other candidate country has visa-free travel except Turkey,” he said. “It is urgent to re-engage in this process of visa-free travel in the Schengen space and the EU,” he added.

The Commission is ready to restart formal negotiations after the summer and work with Ankara on fulfilling the six remaining benchmarks required by the visa liberalisation roadmap, he said.

“We are ready, the Commission is ready to work closely with Turkish authorities,” he said.

Reporting by Tuvan Gumrukcu. Writing by Ece Toksabay. Editing by Daren Butler and Mark Potter

Investors are awaiting news from the U.S. on possible further sanctions

International News via Reuters:

Oil prices edged higher on Friday, heading for a small weekly loss, as investors weighed new European Union sanctions against Russia.

Brent crude futures climbed 50 cents, or 0.72%, to $70.02 a barrel as of 0912 GMT, U.S. West Texas Intermediate crude futures gained 61 cents, or 0.9%, to $68.15 a barrel.

At those levels, the contracts were headed for a marginal weekly loss of 0.5% and 0.4% respectively.

Investors mulled the potential impact on global oil balances of the EU’s agreement on an 18th sanctions package against Russia over its war in Ukraine, which includes measures aimed at dealing further blows to Russia’s oil and energy industries.

Its latest sanctions package will lower the G7’s price cap for buying Russian crude oil to $47.6 per barrel, diplomats told Reuters.

“Neither the price cap for Russian oil nor adding shadow fleet tankers on a sanction list managed to disrupt Russian oil exports so far, so the market remains sceptical of the impact of the latest sanctions,” UBS analyst Giovanni Staunovo said.

Investors are awaiting news from the U.S. on possible further sanctions, after President Donald Trump earlier this week threatened sanctions on buyers of Russian exports unless Moscow agrees a peace deal in 50 days.

“Ultimately, it is now a matter of waiting for possible major changes in U.S. sanctions and tariff policy,” Commerzbank analysts said in a note.

Four days of drone attacks on oilfields in Iraqi Kurdistan that shut down half the region’s output have supported prices, pushing both contracts up by $1 on Thursday.

The attacks “are bound to take their toll as the region’s output has been slashed from 280,000 bpd to around 130,000 barrels per day,” said PVM analyst Tamas Varga.

Officials pointed to Iran-backed militias as the likely source of attacks this week on the region’s oilfields, although no group has claimed responsibility.

Despite the attack, Iraq’s federal government said on Thursday that Iraqi Kurdistan will resume oil exports through a pipeline to Turkey after a two-year halt.   

Reporting by Robert Harvey in London, Siyi Liu in Singapore; Editing by Kate Mayberry, Sharon Singleton and Emelia Sithole-Matarise