Leaders of the European Union have come to a consensus to impose a ban on importing of Russian crude oil and the latest decision would come into effect by the end of the current year. The decision would however exempt, for the time being, pipeline shipments Hungary and two other landlocked Central European countries receive from Russia and critically depend on the supplies.  

Senior officials said the strongest sanction yet imposed on Russia for its invasion of Ukraine, agreed overnight after weeks of bickering, aimed to cut 90 percent of Russia’s oil imports into the 27-nation bloc by year’s end.

“The purpose is to stop Russia’s aggressive war,” Latvian Prime Minister Krisjanis Karins said.

The EU imports two-thirds of its Russian oil through tanker and one-third via the Druzhba pipeline.

The restriction on seaborne imports would be phased in over six months for crude oil and eight months for refined goods, according to a European Commission spokesperson.

Current means that the objective for refined products is essentially early 2023, rather than the end of this year, because that schedule would begin once the sanctions are legally implemented, which EU member states want to accomplish this week.

The goal of reducing 90 per cent of all Russian imports by the end of 2022 includes both seaborne supplies and Poland and Germany ceasing their own pipeline imports of Russian oil by then.

The remaining 10 per cent would be spared from the embargo for a limited time, allowing landlocked Hungary, Slovakia, and the Czech Republic access to Russian oil via the Druzhba pipeline.

Oil prices rose further after the EU deal, raising concerns about inflation, which hit a record high of 8.1% year on year in eurozone countries this month, according to Eurostat. With energy costs on the rise, leaders will ask the EU’s executive Commission to look into ways to control them, such as temporary price controls, according to a draft of the summit conclusions.

The proposal, which could alter before it is accepted, would also charge Brussels with researching prospective reforms to Europe’s electricity market, a move supported by Spain and Greece but opposed by Germany.

Leaders are also expected to support a Commission plan to wean itself off Russian fossil fuels within years by accelerating the deployment of renewable energy, improving energy efficiency, and increasing investments in energy infrastructure.

They will also advocate for greater EU-wide contingency planning in the event of more gas supply disruptions. Moscow cut off gas supplies to the Netherlands on Wednesday for refusing to comply with a demand to pay for gas in roubles, after previously cutting off Poland, Bulgaria, and Finland.

The oil embargo follows an earlier prohibition on Russian coal, and it authorises the EU to apply a sixth wave of penalties, including the exclusion of Russia’s largest bank, Sberbank, from the SWIFT international banking system.

While numerous countries want to start working on a seventh wave of sanctions right away, Austrian Chancellor Karl Nehammer said, “Gas cannot be part of the next penalties.”

Europe is significantly reliant on Russian gas, which explains why it has so far escaped EU penalties. In an effort to provide a buffer against supply interruptions, the EU agreed this month to enact legislation mandating countries to fill gas storage to at least 80% capacity by next winter.

The EU’s gas storage capacity is currently 46 per cent full.

“Russian oil is much easier to compensate…gas is completely different, which is why a gas embargo will not be an issue in the next sanctions package,” Nehammer said.

(Adapted from TheGuardian.com)

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