European Union leaders have reached agreement to ban Russian oil, paving the way for a sixth
round of economic sanctions to punish Russia for its invasion of Ukraine.
The sanctions would forbid the purchase of crude oil and petroleum products from Russia
delivered to European Union members by sea but include a temporary exemption for pipeline
crude oil, European Council President Charles Michel said at a summit in Brussels.
“This immediately covers more than 2/3 of oil imports from Russia, cutting a huge source of
financing for its war machine,” Michel said.
Officials and diplomats still have to agree on the technical details and the sanctions must be
formally adopted by all 27 European Union nations. Hungary, which will continue to receive
Russian oil via pipeline, had been blocking an embargo for the past month as it sought
assurances that its energy supplies wouldn’t be disrupted.
Under the agreement reached, shipments of oil through the giant Druzhba pipeline to central
Europe will be spared from the embargo until a technical solution is found that satisfies the
energy needs of Hungary and other landlocked nations.
Seaborne oil supplies account for about two-thirds of Russian oil imports to Europe, and, once
in place, the measures would cost Russia up to $10 billion U.S. a year in lost export revenue,
according to industry calculations. That’s because the ban would force Russia to sell its crude
oil at a discount to Asia, where it’s already trading at $34 U.S. a barrel, which is cheaper than
the current price of Brent crude oil, the international standard.
The package also proposes a ban on insurance related to shipping oil to third countries, but it
won’t take effect until six months after the adoption of the measures.
A plan to ban Russians from purchasing real estate in the Europe was dropped from the new
sanctions Haggling over the terms of the European Union’s oil embargo also led other member
states to seek exemptions.
Some countries will have a longer transition for the seaborne oil ban. For Bulgaria, a transition
period until June or December 2024 is envisioned, while Croatia could get an exemption for
imports of vacuum gas oil, which is used to make products including gasoline and butane.
Russia shipped about 720,000 barrels a day of crude to European refineries through its main
pipeline last year. That compares with seaborne volumes of 1.57 million barrels a day from its
Baltic, Black Sea, and Arctic ports.
