European Union (E.U.) leaders early this week agreed to ban the imports of around 90% of Russian oil by the end of this year as further punishment on Moscow for invading Ukraine, and gave their final approval on June 2 to the bloc’s sixth round of sanctions against Russia.
This package also imposes further sanctions against Belarus, considering its involvement in the aggression against Ukraine.
The agreement comes into force at 0700 hours GMT on June 3, and come into force with immediate effect.
The initial 27-Member State agreement was reached at a special meeting of the European Council, which began on May 30 in Brussels.
The new sanctions apply to crude oil and petroleum products imported from Russia into the Bloc. The E.U. embargo applies to oil imports that arrive by sea – around two-thirds of the crude oil imported from Russia, according to the European Commission, citing Eurostat data.
However, the import ban does not apply to Russian crude oil delivered into the E.U. by pipeline, following opposition from Hungary’s Prime Minister Viktor Orban, who has held good relations with Russian President Vladimir Putin. Hungary imports around 65% of its oil from Russia.
Other land-locked E.U. countries, such as Slovakia and the Czech Republic, also asked for more time due to their dependence on Russian oil. Bulgaria, already cut off by Russian state-oil and gas major Gazprom, also has asked for more time.
But by the end of this year, the scope of the ban will be wider because Poland and Germany have voluntarily agreed to stop all purchases of Russian oil by the end of 2022. If implemented, this will mean a total of 90% of Russian oil currently coming into the E.U. will be blocked, depriving Moscow of crucial revenues to finance the war.
Russia currently supplies around 27% of the E.U.’s oil imports and around 40% of its natural gas. The combined trades provide Russia with around €400 billion (approximately $428 billion at current exchange rates) a year in revenue. The E.U. so far has dragged its heels on imposing any sanctions on imports of Russian gas.
According to the European Commission, what would be left is around 10-11% of Russian oil imports delivered by the southern Druzhba pipeline supplying Hungary, Slovakia, and the Czech Republic.
But the European Council intends to revisit “as soon as possible” Hungary’s most important exemption – permission for Russian oil to continue flowing through the southern section of the Druzhba pipeline, according to a report by political news portal Politico, citing European Council President Charles Michel, European Commission President Ursula von der Leyen, and other senior officials.
For seaborne crude oil, spot market transactions and execution of existing contracts will be permitted for six months after entry into force, while for petroleum products, these will be permitted for eight months after entry into force.
However, Member States benefiting from the pipeline exemption will not be able to resell such crude oil and petroleum products to other Member States or third countries.
Due to its specific geographical exposure, a special temporary derogation until the end of 2024 has been agreed for Bulgaria, which will be able to continue to import crude oil and petroleum products via maritime transport. In addition, Croatia will be able to authorize until the end of 2023 the import of Russian vacuum gas oil, which is needed for the functioning of its refinery.
According to a Reuters report citing an unnamed E.U. official, in addition to banning seaborne oil imports into Europe, the new sanctions also include an immediate ban on insuring ships carrying Russian oil elsewhere. E.U. experts said that would complicate Russia’s efforts to find other markets for its crude oil, according to the report.
This sixth package of sanctions also includes removing Sberbank, Russia’s largest consumer bank, and an additional two other Russian banks and one additional Belarusian bank from the SWIFT international payment system.
According to the Politico report, the new sanctions also targeted Patriarch Kirill, the leader of the Russian Orthodox Church and a close ally of Putin, as well as Russian military officials responsible for alleged atrocities in Bucha and other towns that were occupied by Russian forces.
But, according to late week reports, before the final adoption of the latest package of sanctions, Hungary blocked the necessary E.U. unanimity for Kirill to be included on the sanctions list, and Kirill was removed from the sanctions list.