EU Leaders Further Tighten Oil Dependency

The European Union has advised of a proposal to further limit the export of Russian oil. They are looking to ban the buying of the liquid gold to further limit Russia’s spending power in their current invasion of Ukraine. The sanctions would forbid the purchase of crude oil and petroleum products from Russia delivered to member states by sea but include a temporary exemption for pipeline crude, European Council President Charles Michel said late Monday during 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 in a tweet. “Maximum pressure on Russia to end the war.” He continued “This sanctions package includes other hard-hitting measures: de-Swifting the largest Russian bank Sberbank, banning 3 more Russian state-owned broadcasters, and sanctioning individuals responsible for war crimes in Ukraine,” Michel added.

The 27-nation bloc has spent weeks haggling over a proposed total embargo on Russian oil but came up against stubborn resistance from Hungarian premier Viktor Orban. EU leaders meeting in Brussels hatched a compromise deal to exempt deliveries by pipeline from the ban, after Budapest warned halting supplies would wreck its economy.

The head of the EU’s executive, Ursula von der Leyen, said the move “will effectively cut around 90 percent of oil imports from Russia to the EU by the end of the year” as Germany and Poland had committed to renounce deliveries via a pipeline to their territory. Russian oil delivered by tankers would be banned, while an exemption will be made for the southern segment of the Druzhba pipeline, said Ursula von der Leyen — president of the European Commission — in a press conference. The northern segment of the pipeline serves Poland and Germany — who have agreed to the embargo. The southern part goes to Hungary, Slovakia and Czech Republic.

Von der Leyen said an exemption will be made for the southern segment, which accounts for 10% of imports on Russian oil.

“As we have a clear political statement by Poland and Germany that they will, as the others, wind down Russian oil, until the end of the year. We have covered overall 90 percent of Russian oil being wound down during this time frame. Leftover is the roundabout 10 or 11 percent that is covered by the southern Druzhba. We have agreed for the moment being for an exemption,” von der Leyen said.

Since the announcement of the ban both WTI and Brent oil assets have climbed from $114.99 to $119.52 and $119.02 to $123.09 respectively, so a further rise in fuel prices are likely to be expected.

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Sources: Bloomberg, France24.com, edition.cnn.com, npr.org.