EU to propose phasing out Russian oil in new sanctions wave

Brussels – The EU will propose a phased out ban on Russian oil imports as part of its fresh round of sanctions against Russia for its invasion of Ukraine, sources said on Sunday.

The European Commission, which draws up sanctions for the EU’s 27 countries, is currently preparing the text, which could be put to the member states as early as Wednesday, diplomats said.

Several diplomats said the ban on oil was made possible after a policy U-turn by Germany, who had resisted the measure, seeing it as too disruptive and potentially harmful to its economy.

To placate doubters, the commission will propose to phase out the ban over six to eight months, giving countries time to diversify their supply, the sources said.

Approval of the ban, which requires unanimous backing by the member states, still faces headwinds.

Hungary is expected to mount strong opposition due to its dependence on Russian oil and close ties to the Kremlin.

A ban is counterproductive and EU countries “must come to their senses,” Hungarian Cabinet Minister Gergely Gulyas told state radio on Sunday.

Other countries are also worried that a ban on oil would increase prices at the pump when consumer prices are already sharply on the rise due to the fallout from the war.

“We must be very attentive to market reactions,” said one official on condition of anonymity.

“There are solutions and we will get there in the end, but we must act with great care,” the official said.

‘Little impact’

Preparing the ground, the commission held discussions over the weekend with the member states most concerned, as well as the International Energy Agency and the United States, which has expressed doubts on the wisdom of an EU oil ban.

U.S. Treasury Secretary Janet Yellen warned last week that a ban could “counterintuitively … actually have very little negative impact on Russia” since higher prices for its remaining exports would blunt the impact.

EU energy ministers will discuss the ban at talks on Monday in Brussels, though they will not sign off on the decision.

This sixth package of anti-Russian measures will also target the country’s largest bank, Sberbank, which will be excluded from the international Swift messaging system, the diplomats said.

The aim of the sanctions will be to dry up Russia’s funding for the war effort in Ukraine. Russia exports two-thirds of its oil to the EU.

The EU had already banned imports of Russian coal, but Poland and the Baltic states have called for an oil embargo as well.

Gas imports from Russia will remain untouched, with hugely dependent Germany promising to wean itself off Russian gas by mid-2024.

The reliance of Europe’s biggest economy on Russian energy has been exposed as an Achilles’ heel as Western allies scramble to punish Russian President Vladimir Putin for his attack on Ukraine.