The European Union (EU) is moving forward to propose a ban on Russian oil by the end of 2022.
Until this ban is put into effect, the EU will continue to implement restrictions on imports of Russian oil.
The EU also plans to push for more thoroughgoing sanctions on Russia and its allies by advocating for more Russian and Belarusian banks to be cut off from the SWIFT telecommunications network. Bloomberg reported that this list of banks includes Sberbank PJSC, Russia’s largest financial institution, which has been providing a vital economic lifeline in recent months. Sberbank was previously sanctioned by the U.S. and U.K.
A decision on the new sanctions may come as soon as next week at a meeting of EU ambassadors. If the sanctions are to go into effect, this would be the sixth package of sanctions placed on Russia since it invaded Ukraine this past February.
In order for the EU to implement sanctions, all of its 27 member states must agree to enforce them in their nations. Reportedly, countries like Hungary and Germany are historically hesitant to issue restrictions on imports of Russian oil due to their nations’ dependence on it. Currently, the EU is the single largest consumer of crude oil and fuel from Russia. In 2019, almost two-thirds of crude oil imported by EU nations came from Russia.
Reportedly, an embargo on Russian oil would dramatically increase tensions between the EU and Russia as the EU tries to pressure Putin into ending his invasion of Ukraine. These sanctions are aimed at hitting Russia’s revenue from oil exports as much as possible without causing turmoil in the global marketplace. One concern is that increasing the costs of Russian oil by sanctioning it could lead to a boost in Russia’s income instead of punishing it.
An ongoing issue that the EU and Russia are experiencing is how to pay for gas that is being imported into EU member nations. With the majority of Russia’s banks being removed from the SWIFT telecommunications network, conducting business with Russian companies is harder than it once was. Making the process increasingly difficult is that Russian entities are demanding EU member states pay for their oil imports in Russian rubles, but doing so would breach sanctions currently in place.
If EU member states don’t comply and start paying for their oil imports in rubles, Russia will cease doing business with them. Poland and Bulgaria have already been cut off by Russia for failing to meet the country’s standards.