EU to ban 90 per cent of Russian oil imports by the end of the year
Image credit: Dreamstime
European Union leaders have agreed to place an embargo on the majority of Russian oil imports into the bloc by the end of 2022, as a response to the invasion of Ukraine.
The commercial war between Russia and the EU continues, as European officials approve a new set of sanctions against the Russian giant, in light of the continuing invasion of Ukraine.
The embargo covers Russian oil brought in by sea, allowing a temporary exemption for imports delivered by pipeline, which is expected to provide Hungary, Slovakia and the Czech Republic with additional time to wean themselves off crude oil supplies from Russia.
Russia currently supplies 27 per cent of the EU's imported oil and 40 per cent of its gas, with the bloc paying around €400bn (£341bn) a year in return. That is equivalent to around 2.4 million barrels per day, according to data from the International Energy Agency. For this reason, the sanctions - expected to be legally endorsed on Monday - will likely transform the bloc’s energy sector.
Ursula Von der Leyen, the head of the EU’s executive branch, said the punitive move will “effectively cut around 90 per cent of oil imports from Russia to the EU by the end of the year.”
The largest commitments have come from Germany and Poland, which have agreed to stop all oil imports via the northern part of the Druzhba pipeline.
The new package of sanctions does not only relate to oil. It will also include an asset freeze and travel ban on individuals, as well as the exclusion of Russia’s largest bank, Sberbank, from SWIFT, the major global system for financial transfers from which the EU previously banned several smaller Russian banks. Three big Russian state-owned broadcasters will be prevented from distributing their content in the EU.
In addition to the sanctions, European leaders also agreed to provide Ukraine with a €9bn (£7.6bn) assistance package to support the country’s economy, according to EU Council President Charles Michel. However, it was unclear whether the money would come in grants or loans.
“We want to stop Russia’s war machine,” Michel said, lauding what he called a “remarkable achievement.”
Since the Russian invasion of Ukraine in February 2022, the EU has imposed five rounds of sanctions on Russia, targeting more than 1,000 people individually, including Russian President Vladimir Putin and top government officials as well as pro-Kremlin oligarchs, banks, the coal sector and more.
However, no sanctions had been imposed on Russian gas, until now.
Hungarian prime minister Viktor Orban had made clear he could support the new sanctions only if his country’s oil supply security was guaranteed. Hungary is highly dependent on Russian oil, which makes up 60 per cent of all its oil imports.
Although Hungary’s reticence and the rising energy crisis raised doubts over the chances of a decision at the summit, European leaders reached a compromise after Ukrainian President Volodymyr Zelensky urged them to end “internal arguments that only prompt Russia to put more and more pressure on the whole of Europe.”
Zelensky said the sanctions package must “be agreed on, it needs to be effective, including [on] oil,” so that Moscow “feels the price for what it is doing against Ukraine” and the rest of Europe. Only then, he said, will Russia be forced to “start seeking peace.”
Eventually, UE officials agreed to award an extension to Hungary in order to approve the wider package of sanctions, which required consensus.
Following news of the embargo, oil prices have continued to climb, with Brent crude reaching its highest level since March 2022, worsening an already dire energy crisis across the continent. However, Gazprom, the Russian state-owned energy company, had already cut supplies to Poland, the Netherlands and Bulgaria for refusing to pay for gas in roubles.
The UK, which is no longer part of the EU, has nonetheless joined this effort, pledging to phase out Russian oil by the end of the year, although the country gets only 8 per cent of its oil from Russia.
Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.