New EU sanctions to target Russian oil

The European Union is expected to target oil imports from Russia in a fresh sanctions package aimed at undermining the finances of Moscow and its ability to wage war in Ukraine.

The details of the proposed new sanctions are expected to be laid out on Wednesday by the European Commission, before ambassadors of EU member states meet to discuss whether there is the required consensus to adopt the measures.

A breakthrough in Germany’s position has allowed the 27 to come close to agreement on cutting off a major source of revenue for the regime of Vladimir Putin through its oil sales.

This week German energy minister and deputy chancellor Robert Halbeck said his country had made “great progress” in sourcing alternatives to coal and oil from Russia.

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“We have managed to reach a situation where Germany is able to bear an oil embargo,” he said, though he warned that the move would impose costs on the EU.

While Poland and the Baltic states have called for an immediate total ban on oil imports from Russia, Hungary and Slovakia are more hesitant as landlocked countries without the infrastructure to allow them to easily receive alternatives to Russian oil.

Phased approach

To allow for such national circumstances, the commission is expected to propose a phased approach, that would allow member states to move immediately to cut off oil imports if they wish, while others can take more time to adjust.

Ukrainian president Volodymyr Zelenskiy called for action in a video address this week, saying the EU “package should include clear steps to block Russia’s revenues from energy resources”.

Cutting out Russian oil is seen as easier than gas, which is deeply embedded in several EU economies. The security of the energy source to the EU was thrown into uncertainty when Russian energy giant Gazprom cut off the gas supplies of Bulgaria and Poland last week.

Payments to Gazprom

In an emergency meeting of energy ministers on Monday, some EU countries called for more certainty over what kind of payments to Gazprom risk breaching EU sanctions on Russia.

Gazprom said the gas had been cut because the Bulgarian and Polish energy companies had not paid for the deliveries in roubles, a change demanded by Moscow in a recent decree seen as a bid to undermine the effect of EU sanctions and support the value of the currency.

The commission has warned that energy companies that comply with a Russian demand to open a rouble-denominated bank account and complete payments through transfers into it would be in breach of sanctions.