EU Set to Ban Russian Oil Imports After Compromise with Hungary

EU leaders agreed on principle to ban 90% of Russian oil imports by the end of the year. The bloc had been struggling to convince Hungary over its toughest sanctions on Russia since it invaded Ukraine on Feb. 24.

The agreement is expected to clear the way for other sanctions as well, including cutting Russia’s biggest lender, Sberbank, from the SWIFT international messaging system. This will be the sixth sanctions package the EU imposes on Russia if it goes through.

European Council President Michel said after the first day of a two day EU Leaders’ summit that agreement to ban Russian oil imports is in place. Michel added that this would immediately cover more than two thirds of oil imports from Russia, slashing a big source of funding for its war efforts.

Two thirds of all oil imports from Russia comes via seaborne tankers and one third through the Druzhba pipeline. An embargo on seaborne imports would therefore cover two thirds of all oil imports from Russia.

Once Germany and Poland, which are also connected to the pipeline, stop buying Russian oil by the end of the year, the ban would encompass 90% of all imports.

The remaining 10% will be temporarily exempt from the ban including supplies to Hungary, which had blocked the deal over energy security concerns, along with Slovakia and the Czech Republic.

Hungary appeared to get some reassurances from other member states that emergency measures would apply if sudden interruptions of supply occur. Budapest has raised its concerns about risks posed to the Russian oil pipeline that goes through Ukraine to Hungary.

The ban on oil imports to EU countries will apply to Russian crude that is delivered by oil tankers.

It was not clear how member states that receive oil from tankers would be compensated for the higher cost compared with those that will keep the pipelines open.

Earlier in the meeting, Ukrainian President Zelenskiy accused the EU leaders of being too soft on Russia as the ban on oil imports still seemed elusive.

Zelenskiy questioned why the EU would be dependent on Russia while it should have been vice-versa. He also said Russia continued to earn almost a billion euros everyday by selling energy.

Since the start of the Russian invasion of Ukraine more than three months ago, the EU has imposed five rounds of sanctions with uncharacteristic speed and unity given the complexity of the measures.

But the ban on oil imports took a long time as EU members feared economic risk for Europe grows. Many EU member states depend on Russian crude.

Dutch Prime Minister Rutte said he was surprised by the turn of events. He said he was not hopeful they could reach a deal early in the evening but around 11 p.m. everything was sorted.

The summit also brought backing for a package of EU loans worth €9 billion, with a small component of grants to cover part of the interest, for Ukraine to keep its government going and pay wages for about two months.

Leaders also backed the creation of an international fund to rebuild Ukraine after the war, with details to be decided later.

The second day of the talks will focus mainly on accelerating work to help Ukraine move its grains out of the country to global buyers via railroad and truck, since Russia’s blockade of Ukraine’s Black Sea ports continues.

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