After long weeks of internal discussions and confrontations, EU leaders have agreed on an oil embargo to be imposed on Russia, which will take effect in the coming months. The agreement is expected to reduce crude oil purchases from Russia by EU countries by more than two-thirds, compared to the state of trade before the country invaded Ukraine. Its purpose is to cause economic damage to Russia’s revenues from oil exports, which are used, among other things, to finance the war in Ukraine. Hungary, the Czech Republic and Slovakia will be excluded from the oil embargo.
At the same time, oil prices continue to climb and Brent, which jumped more than 6% last week, adds another 1.5% and the price of a barrel rises to $ 123.3.
The move was supposed to be announced about a month ago, and is valid for more than 90% of Russian oil exports to European countries, but a number of countries, especially Hungary, vehemently opposed it. Despite initial agreement on the part of EU countries to exclude Hungary from the initiative, the country has in fact vetoed a decision on an embargo, which requires unanimous agreement between EU members. The Hungarian reasoning, which was also joined by the Czech Republic and Slovakia, was that unlike Germany which can afford to import crude oil from other sources by sea, they are completely dependent on Russian crude oil coming through the Druze pipeline (friendship).
Ultimately, the pressure on the countries over the past day, and their opposition, has led to a compromise whereby the union’s embargo will only apply to Russian crude oil coming to Europe by sea, and not to one flowing in pipelines by land.
Despite this, Germany, which also receives huge amounts of crude oil in the pipelines, has announced that it will completely stop buying Russian crude oil in the coming months. Germany is under international and public pressure to take tangible measures against Russia, amid its refusal so far to send heavy armaments to Ukraine. Poland, which is also connected to the Druze pipeline, has also announced that it will stop buying Russian crude oil. The decision was made during a summit of EU leaders in Brussels that convened yesterday and will end today.
Gas and oil account for 43% of Russia’s revenues
It is estimated that EU countries are still buying crude oil from Russia worth about 400 million euros a day, partly due to the fact that oil prices have soared in recent months and once again exceeded the $ 120 barrel per barrel this week. Until Russia’s invasion of Ukraine, the EU was the largest customer of Russian crude oil, with imports of 138 tonnes in the past year. This amount accounts for more than half of Russia’s total crude oil exports (260 million tons), which together with Russian gas and coal exports account for 43% of the country’s revenues. The EU has received about a quarter of its crude oil consumption from Russia.
The agreement is part of the EU’s sixth package of sanctions, which includes the addition of the big Russian bank Sberbank to the list of banks to be cut off from Swift, and a ban on broadcasting on Russian TV channels in the EU. The package also includes billions in aid to Ukraine. European countries, especially Germany and Italy, continue to purchase natural gas from Russia for an estimated 400-500 million euros a day.