EUROPEAN UNION LEADERS have agreed to embargo most Russian oil imports by the end of the year as part of new sanctions on Moscow over its invasion of Ukraine.
The embargo covers Russian oil brought in by sea. Refined petroleum products will also be banned after eight months.
EU Council President Charles Michel said the agreement covers more than two-thirds of oil imports from Russia.
Ursula Von der Leyen, President the European Commission, said the punitive move will “effectively cut around 90% of oil imports from Russia to the EU by the end of the year”.
Although the ban is not expected to be in place until the end of the year, countries will have to begin preparing themselves for the impacts – here’s what we know so far:
How dependant is the European Union on Russia’s oil supplies?
The EU gets 25% of its oil from Russia and about 40% of its natural gas.
Why is this ban limited to oil brought in by sea?
Participants in yesterday’s EU summit hatched a compromise deal that exempts deliveries by pipeline from the oil import ban, after Hungarian President Victor Orban warned halting supplies would wreck the country’s economy.
Hungary gets more than 60% of its oil from Russia and depends on crude that comes through the Soviet-era Druzhba pipeline.
Other countries such as Bulgaria will have a longer transition for the seaborne oil ban and Croatia may get an exemption for imports of vacuum gas oil.
These countries will be given a year to find alternative suppliers.
Russia turning off the tap
A number of European countries have already seen their gas shipments halted after refusing to pay Russian giant Gazprom in rubles. The Netherlands and Denmark are expecting to be next as their payment deadlines pass this week.
Russia has previously halted deliveries to Finland, Bulgaria and Poland, in a move described by the EU as “blackmail”.
What will this all mean for member states – and their fuel prices?
Well, it is already having some impact. This global pricing benchmark for oil has topped $120 a barrel for the first time since early March, driven in part by the anticipation of decisions made in Brussels last night.
Before the ban even comes in, it may also heighten inflationary pressures within the Eurozone.
Soaring energy prices have been the major contributor to the surge in consumer prices over the past year and the war in Ukraine caused a jump in global crude oil and natural gas prices.
For Ireland, the impact may be softer as the UK supplies most of IReland’s oil imports. The British gas supply comes mostly from domestic production but also from Norway, the North Sea, parts of Europe and the Middle East. Just 5% of it comes from Russia directly.
This means it is unlikely our access to oil supplies will suffer significantly, but it also means prices are likely to remain volatile as demand for oil from alternative sources grows.
There are also EU treaties in place which mandate equal sharing of gas, so if, after the ban comes in, there is a general shortage in the European Union, Ireland may have to share some of its supplies.
Last night von der Leyen outlined the EU’s plan to phase out its dependency on Russian gas, oil and coal as soon as possible.
She said the plan has four pillars:
This will involve an outreach to countries such as Norway, the US, Eqypt, Qatar and Azerbaijan. The European Commission President said financing of €300 billion will fund this plan, including €225 billion in Recovery and Resilience Facility (RRF) loans.
Speaking after the summit yesterday, Taoiseach Micheál Martin said it is clear that this is “a watershed moment” for the EU in terms of its dependency on Russian oil and gas.
He said this plan will “make for fairly rocky territory over the next couple of years” for pricing of fossil fuels. However he said it will mean an acceleration of renewable projects.
- With reporting by Ian Curran, additional reporting from PA and AFP.
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