How EU Plans to Restrict Russian Oil Imports
The EU Commission proposed the toughest sanctions against Russia, including a phased oil embargo as part of the sixth round of retaliatory measures following Moscow’s invasion of Ukraine. The president of the European Commission said on Wednesday that the embargo would be a complete ban on the import of Russian oil, sea and pipeline, crude and refined oil. In fact, this will be in stages to give states time to find alternative energy sources.
For the project, it will be necessary to support all member countries. Some countries in the 27-member bloc expressed opposition to a comprehensive embargo. Some regions are too dependent on Russian oil. Ambassadors from EU countries didn’t reach an agreement. However, discussions may resume on Thursday.
The European Commission is trying to cut off supplies of Russian crude oil for six months. Under the proposal, Slovakia and Hungary may give a more extended period to adapt to the embargo; By the end of 2023.
Measures include a one-month ban on all shipping, insurance, and financing services, Which EU companies offer to transport Russian oil worldwide.
The ban applies to Russian oil exports around the world. This will potentially affect Moscow’s ability to find alternative buyers; Once the EU stops buying Russian oil. The EU CEO also suggested adding Sberbank and two other financial institutions to several banks that aren’t from the SWIFT messaging system.
EU Plans and Russia
If agreed, the embargo will follow by the US and the UK. They imposed bans to reduce one of the most significant revenue streams for the Russian economy. The ambassadors of the 27 EU governments should receive the proposal as early as this week. This will allow it to become law soon. In April, a similar embargo on Russian coal imposed by the European Union was immediately put on the market. There was a four-month termination period for existing contracts.
A Kremlin spokesman said Wednesday that Russia was looking for a different option in preparing for an EU oil embargo. Russia is Europe’s largest oil supplier, providing 26 percent of the bloc’s oil imports by 2020. Poland, Germany, and the Netherlands are the biggest buyers of Russian oil in Europe.
Europe paid Russia 14 billion euros in oil two months ago. The European Commission is working to speed up the supply of alternative energy to reduce the cost of banning Russian oil. However, due to the lack of sufficient and moderately-priced alternatives, The EU is likely to face an increase in energy taxes or a slowdown in economic activity.
According to a Russian political analyst, Moscow is likely to find other buyers outside Europe, including China and India. He said the EU was facing higher prices for alternative oil imports. Analysts predict that Europe will continue to buy Russian oil through third countries as soon as it imposes an embargo.
EU Sanctions and Natural Gas
Sanctions on natural gas have not yet been imposed. The potential ban has not yet been adequately addressed at the EU level due to its reliance on it. In 2021, the EU imported more than 4percentnt of its total gas consumption from Russia.
After gas outages in the winter of 2006-2009 in some Eastern European countries, The EU has been working on a standard energy policy to strengthen its energy security and internal energy market.
In 2021, energy accounted for 62 percent of total EU imports from Russia. This was 77 percent of 2011; However, the bloc is still far from ending its dependence on Russian energy imports. European leaders want to act quickly against Russia. However, they have been stuck in the reality of European governments’ decisions for decades. They thought it was in their best interest to make a deal with President Putin.
However, the EU Commission took steps to finish its reliance on Russian gas. On March 8, it published its “REPowerEU” plan outlining the measures; To drastically reduce Russian gas imports by the end of the year to achieve complete independence from Russian fossil fuels by the end of the decade.
Slovakia, the Czech Republic, Hungary, and Bulgaria have expressed concern over the oil embargo plan. Also, Slovakia receives almost all imported raw materials from Russia; Basically, the Soviet-era pipeline joined Hungary, which is also heavily dependent on Russian supplies, to demand an exemption from the embargo.
According to the Slovak Minister of Economy, the country agrees with the article. However, it needs a transition period before the situation adjusts. Longer transitions will give Slovakia time to secure alternative supplies. Moreover, Hungary has said it cannot support the proposed embargo as it would undermine its energy security.
The Brussels sanctions package bans oil supplies from Russia to Europe, with a relatively brief warning in the case of Hungary by the end of next year. Hungary can agree to these measures only if the import of crude oil from Russia through the pipeline is exempt from sanctions.
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