Brussels proposes EU import ban on all Russian oil

Brussels has proposed a phased-in ban on imports of all Russian oil as EU member states try to agree a sixth package of penalties against Moscow for its invasion in Ukraine.

The ban will cover all Russian oil, seaborne and pipeline, crude and refined, European Commission president Ursula von der Leyen said on Wednesday. She vowed to phase out the supplies in an “orderly fashion”, hitting crude oil within six months and refined products by the end of the year.

The commission is also proposing that Sberbank, Russia’s largest bank, be disconnected from the Swift international banking payment system, von der Leyen told the European Parliament. Two other banks, Credit Bank of Moscow and Russian Agricultural Bank, will be cut from Swift, according to draft proposals seen by the Financial Times.

Hungary and Slovakia are particularly reliant on Russian oil and will get until the end of 2023 to comply with the import ban, according to the draft of the commission’s plans.

The measures, which will need to win the backing of all 27 member states, mark the latest escalation in western sanctions intended to undermine the Kremlin’s ability to wage war on Ukraine by hitting the mainstays of the Russian economy.

Russia derives more income from selling oil and oil products than it does from gas exports, but the commission is seeking to tread a fine line to avoid driving the oil price too high and inadvertently generating yet more income for president Vladimir Putin.

Brent oil climbed as much as 2.5 per cent on Wednesday to a high of $107.58 a barrel after news of the EU move broke. The EU is hoping that by phasing in the oil embargo by the end of the year it will create extra time for member states to secure alternative supplies and re-fit refineries to use different kinds of crude.

With the latest measures, “we maximise pressure on Russia, while at the same time minimising collateral damage to us and our partners around the globe,” von der Leyen said in Strasbourg. “To help Ukraine our own economy has to remain strong.”

Von der Leyen also said the EU will be extending its ban on Russian broadcasters that it blames for disinformation. She did not name them, but the draft document named Rossiya RTR / RTR Planeta, Rossiya 24 / Russia 24, and TV Centre International.

“They will not be allowed to distribute their content any more in the European Union, in whatever shape or form, be it on cable, via satellite, on the internet or via smartphone apps,” von der Leyen said in Strasbourg.

The draft sanctions also propose restrictions on the provision of auditing services.

EU diplomats are due to start discussing the measures on Wednesday, with the oil measures set to be the most sensitive part of the package.

In an early sign of Hungary’s continued resistance, government spokesman Zoltan Kovacs warned that Budapest had seen “no plan nor guarantees” on ways to manage the transition away from Russian oil in the current proposals.

Kovacs added that it was unclear how Hungary’s energy security would be guaranteed.

Momentum behind an oil ban grew in recent weeks after Germany made it clear that it was making progress in phasing out its own reliance on oil. However, there remains far greater resistance to the idea of banning Russian gas due to its critical role in the energy mix in several member states, including Germany.

As the EU prepared to discuss the package, Ukraine’s president said on Tuesday that “we must all insist that it includes an oil embargo and a real blockade of any schemes that Russia uses to deceive the free world and ignore sanctions”.

“Russian banks must be completely disconnected from the global financial system,” Volodymyr Zelensky added in the video address to Albania’s parliament.

Responding to the EU move, Oleg Ustenko, Zelenky’s chief economic adviser, said that Ukrainians had “watched in disbelief as our partners in the EU continued to purchase Russian fossil fuels, funding war crimes in our country to the tune of €1bn every day.” He added: “We now finally see action” but noted the “huge quantities” of Russian oil and gas still being traded worldwide.

Additional reporting by Neil Hume

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