All forms of Russian coal will be banned by the European Union, a move the European Commission said on Friday would affect about 8 billion euros ($ 8.7 billion) in Russian exports a year. Europe plans to cut imports over the next four months, an EU source told CNN Business.
This is the first time Europe has come after Russia’s huge energy sector, but not far enough for Ukraine, which reiterated its call for an oil embargo on Friday after a missile strike at a railway terminal in Kramatorsk, Ukraine, killed about 30 people. and injured hundreds, according to President Vladimir Zelensky.
“How much longer can Europe ignore the embargo on oil supplies from Russia?” Zelensky said.
The European Commission says about 45% of the bloc’s natural gas imports and about 25% of its oil imports come from Russia. Since the start of the war, the European Union has imported about 35 billion euros ($ 38 billion) in Russian energy.
Coal has always been an easier destination: Europe imports almost half of its coal from Russia, but demand for the world’s dirtiest fossil fuel is already declining and alternative supplies are more affordable than natural gas.
Still, shocking reports from Bucha and Kramatorsk have increased pressure on EU leaders to consider banning or restricting oil imports from Russia.
How likely is a ban on oil?
Russia is the world’s second-largest exporter of crude oil, after Saudi Arabia, and accounted for 14 percent of global supplies last year, according to the International Energy Agency. Nearly two-thirds of its exports go to Europe before Russia invades Ukraine.
In March, Europe set a deadline of 2027 to give up Russian gas and oil. But the oil embargo, which began much earlier, is already firmly on the table. European Commission President Ursula von der Leyen told the European Parliament on Wednesday that the fifth package of sanctions “will not be [its] last. “
“Yes, we have banned coal now, but now we have to look at oil,” she added.
French President Emmanuel Macron was one of the first leaders to openly support a total ban on Russian oil. Speaking to French television on Monday, Macron said there were “very clear signs” that war crimes had been committed in Bucha and that Europe “could not let it slip”.
On Friday, French Finance Minister Bruno Le Mer told CNN that France did not want to wait to ban Russian oil after seeing the railway attack earlier in the day.
“When France is concerned, we are ready to go further and decide to ban oil, and I am deeply convinced that the next steps and the next discussions will focus on this issue of banning Russian oil,” he said.
German Chancellor Olaf Scholz said on Friday that he believed Germany would be able to stop importing Russian oil “this year”. Speaking at a news conference with British Prime Minister Boris Johnson during a visit to London, Scholz said Germany was “actively working” to become independent of Russian oil imports, but added that it would take more time for Germany to give up. from Russian gas.
More details on the oil sanctions can be obtained on Monday when EU foreign ministers meet for talks. Table options include taxing oil imports and forcing buyers to pay into an escrow account that can only be used by Russia under certain conditions.
It can be difficult to get all EU Member States to agree. Dependence on Russian oil varies widely across the European Union. Hungary is particularly exposed, and Viktor Orbán, the country’s newly elected prime minister and longtime ally of President Vladimir Putin, may reject any proposals.
“As long as we condemn Russia’s armed offensive and also condemn the war, we will not allow Hungarian families to be forced to pay the price of the war,” Orban said in a statement in early March.
“Sanctions should not be extended to oil and gas,” he added.
Can Europe do it?
While sanctions against Russian natural gas are unlikely at this time due to the economic damage they could cause, Europe could better withstand the Russian oil embargo.
The United States, the United Kingdom, Canada and Australia have announced bans on Russian oil and a broader de facto embargo has already been imposed as banks, traders, freight forwarders and insurance companies try to avoid financial sanctions.
European oil companies, including Shell, TotalEnergies and Neste, have stopped buying Russian oil or will do so by the end of this year.
The price of Brent crude oil, the global benchmark, rose in early March, just above $ 139 a barrel – a 14-year high – but has since fallen back to about $ 100 a barrel. And Russia’s Urals crude traded at about $ 34 a barrel below that record discount. In recent days, rich countries have promised to use their oil reserves to help reduce prices and counter cuts in Russian supplies. In March, the United States announced that it would release 180 million barrels. IAEA member states have followed suit, adding another 60 million barrels to world reserves.
Claudio Galimberti, vice president of analysis at Rystad Energy, said the impact of the EU’s oil embargo on Russia would depend on the extent to which it could divert exports to Asia.
“While it manages to divert most of its oil exports from Europe to Asia, the impact may be – relatively speaking – not great. “Otherwise, it will completely cripple the Russian economy, as it is heavily dependent on oil exports,” he told CNN Business.
While Europe accounts for more than half of Russia’s oil exports, China is the largest single buyer, accounting for about 20 percent, according to the IEA.
– Chris Liakos of CNN, Niam Kennedy, Mark Thompson, Emmett Lyons and Sugam Pocarell contributed to this report.
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