Brussels prepares to hit Russia with ‘smart sanctions’ on oil imports

"One of the issues we are considering is some form of an oil embargo," said European Commission executive vice-president Valdis Dombrovskis. [EPA-EFE/JULIEN WARNAND]

The European Union is preparing “smart sanctions” against Russian oil imports, The Times reported on Monday (25 April), citing the European Commission’s executive vice-president, Valdis Dombrovskis.

“We are working on a sixth sanctions package and one of the issues we are considering is some form of an oil embargo. When we are imposing sanctions, we need to do so in a way that maximises pressure on Russia while minimising collateral damage on ourselves,” Dombrovskis told The Times.

He said that precise details of the oil sanctions had not yet been agreed but could include a gradual phasing-out of Russian oil or imposing tariffs on exports beyond a certain price cap, the newspaper reported.

Russia is Europe’s biggest oil supplier, providing 26% of EU imported oil in 2020. Europe gets roughly a third of its gross available energy from oil and petroleum products, in sectors from transportation to chemicals production.

Ukraine and some EU states, including Poland and Lithuania, want a ban on Russian oil and gas, whereas Germany and Hungary are opposed to an immediate oil embargo.

“The best outcome for the Commission is the toughest possible sanctions. However, It makes no sense for us to propose something that will not get support,” said Věra Jourová, the vice-president of the European Commission in charge of justice.

Commissioner Jourova expects sixth Russia sanction package this week

European Commission Vice-President Věra Jourová said she expects the sixth sanction package against Russia to be introduced as soon as this week.
“I am expecting the announcement of the sixth package this week. It depends on getting the best possible outcome …

Italy, which previously opposed an immediate end to Russian gas supplies, is now calling for a cap on its price, which Rome believes will deprive Moscow of some of its resources.

Oil and oil products made up more than a third of Moscow’s export revenues last year. Currently, Europe spends around $450 million per day on Russian crude oil and refined products, around $400 million per day for gas, and roughly $25 million for coal, according to think-tank Bruegel.

Beyond the oil embargo, the EU’s six sanctions package is also expected to target Russia’s banking sector, including the country’s largest bank, Sberbank, said Ursula von der Leyen, the president of the European Commission.

The EU has so far spared Sberbank from previous sanctions rounds because it, along with Gazprombank, is one of the main channels for payments for Russian oil and gas, which EU countries have been buying despite the conflict in Ukraine.

As Jourová indicated, banking sector sanctions are highly likely to be accepted as there are signs of a consensus among the EU countries.

New EU sanctions on Russia to target Sberbank, von der Leyen says

The European Union’s forthcoming sanctions on Russia will target banks, in particular Sberbank, as well as oil, the head of the European Commission Ursula von der Leyen told a German newspaper.

No agreement yet

There is insufficient support from EU member states for a complete embargo or punitive tariff on Russian oil and gas imports, the EU’s top diplomat Josep Borrell was quoted as saying by German newspaper Die Welt on Monday (25 April).

“At the moment, we in the EU do not have a unified position on this question,” Borrell told the newspaper.

Borrell said the topic will be discussed at the next EU summit due at the end of next month and that he did not expect any decision on the matter before then.

“A final proposal for an embargo on oil and gas is not yet on the table,” he said.

The EU Commission will probably make proposals for a sixth package of sanctions to the member states this week, Die Welt said, without citing sources.

All EU states are working to cut their dependency on Russian oil and gas, Borrell said, adding that he believed the bloc will be able to reduce its dependency eventually.

“At some point it will happen and then Russia will feel painfully that the revenues from the oil and gas business are being lost,” he added.

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