The president of the European Commission, Ursula von der Leyen, presented the sixth set of sanctions against Russia in the plenary session of the European Parliament on 4 May. Among the new economic retaliation measures, the EU executive is considering a complete embargo on oil imports from Russia.
“Let’s be clear: this will not be easy,” Von der Leyen told MEPs, as “some member states are highly dependent on Russian oil.”
The import ban covers all Russian crude and refined oil, whether transported by sea or by pipeline. The commission is considering a gradual approach, aiming to ban crude oil within six months and refined products by the end of the year. “In this way, we maximise the pressure on Russia, while minimising the collateral damage to us and our partners around the world.”
One of the reasons for spreading the embargo over several months is to minimise the impact on prices.
For his part, Luxembourg energy minister Claude Turmes (déi Gréng), who was contacted by Delano’s sister publication Paperjam, confirms that, because it is a progressive embargo, “the impact will be moderate”. He adds: “One of the reasons for spreading the embargo over several months is to minimise the impact on prices.”
24.8% of European imports
Although ambitious, the embargo on Russian oil is not yet a done deal. The 27 member state governments received the sanctions proposal on the evening of 3 May from the European Commission. Discussions will start at European Council level on 5 May. Although a decision is expected later this week, some differences may emerge between the different countries. Sanctions packages can only be adopted unanimously by the council.
On 29 April, , saying this would lock the country into a firm position with no room to negotiate a compromise at EU level.
The commission's proposal includes exceptions for Hungary and Slovakia which should allow them to continue ordering Russian oil until the end of 2023. According to the International Energy Agency (IEA), Hungary and Slovakia were 54.3% and 59.9% dependent on Russia for their oil imports in 2020.
In 2021, oil imports accounted for 70.9% of the European Union's energy imports, according to the European Statistics Office, Eurostat. In the same year, Russia supplied 24.8% of these imports, being the main supplier of oil to member states.
4.7% of Luxembourg’s imports
While the IEA estimates that Luxembourg’s imports of Russian oil amounted to 4.7% in 2020, Turmes is keen to qualify this figure: “It’s difficult to say, because we don’t have any Russian oil coming directly to Luxembourg. Russian oil arrives mainly in Rotterdam, and part of the oil that arrives in Luxembourg comes from Rotterdam (where part of Luxembourg’s strategic reserves are located, editor’s note). In Rotterdam, 25-30% of it comes from Russia, but this percentage has been falling sharply in recent weeks.”
We don’t have any Russian oil coming directly to Luxembourg. Russian oil arrives mainly in Rotterdam, and part of the oil that arrives in Luxembourg comes from Rotterdam
The energy minister explains that “each European country is obliged to have a 90-day oil reserve”. And he specifies that “ours are partly in Luxembourg, partly in the greater region and partly in Rotterdam”, stressing that “the embargo will have no impact on these reserves”, because the “oil market is globalised”. Turmes therefore expects a simple change of suppliers “with supplies from the Middle East and the United States.”
In view of these alternative supplies, the energy minister says that “there is no constraint for ships to deliver oil to European ports”. However, the issue remains different for a handful of other EU countries. “The constraint on Russian oil is mainly in Hungary, Slovakia, the Czech Republic and Germany, because they are directly supplied by pipelines that come directly from Russia.”
A risk of retaliation
However, some commentators are critical of the commission's proposal. “The EU’s progressive embargo on Russian oil is a risky bet, because in the short term it could keep Russian revenues high, while implying negative consequences for the EU and the global economy in terms of higher prices,” Simone Tagliapietra, a senior fellow at Bruegel, a Brussels-based think tank specialising in European economic affairs, told Paperjam.
“This is without mentioning the risk of retaliation on natural gas supplies,” Tagliapietra added. Since it is progressive, Russia could simply cut off the oil supply to some European countries, in the same way it announced on 26 April that it would stop gas flows to Poland and Bulgaria because of non-compliance with its rouble payment conditions.
The EU’s progressive embargo on Russian oil is a risky bet
The idea of an embargo on Russian oil is not new. Following the entry of Russian troops into Ukraine, the European Council organised an informal meeting of Heads of State or Government in Versailles on 10 and 11 March, in particular to define the union’s strategic sovereignty. This meeting gave rise to the Versailles Declaration, in which the representatives of the member states agreed to “gradually break our dependence on Russian gas, oil and coal imports as soon as possible.” On 7 April, the European Union decided an embargo on Russian coal.
For its part, Washington announced, already on 8 March, that president Joe Biden had signed an executive order to ban US imports of Russian oil, liquefied natural gas and coal.
Sanctions and relief packages to be voted on
In her , von der Leyen listed other sanctions the EU will apply if members agree. “It is the international law that counts and not the right of might,” she stated. High-ranking military officers and other individuals who committed war crimes in Ukraine (like in Bucha and Mariupol) will be listed, to hold them accountable.
Russia’s largest bank Sberbank is also set to be taken off the Swift network, as are two other major banks. Aiming to isolate Russia, “we hit banks that are systemically critical to the Russian financial system and Putin’s ability to wage destruction.” A media exclusion is also planned, with three big state-owned broadcasters from Russia set to be banned from EU airwaves. Services by EU accountants, consultants and spin doctors will also be cut off, Von der Leyen said.
Von der Leyen appealed to MEPs for the funding of a recovery and relief package to help Ukraine survive on the short and long term. The president said that the package would help stabilise the country and make sure that all aid went to the people directly, concluding that “eventually, it will pave the way for Ukraine’s future inside the European Union.”
This story was first published in French on . It has been translated and edited for Delano.