EU oil ban adds pressure on Russia but obstacles remain: Analysts
For a complete embargo to be successful, the bloc has yet to convince countries which rely more heavily on Russian energy supplies.
The European Union is proposing a comprehensive oil embargo against Russia for the first time, as Moscow continues its war on Ukraine.
The bloc hopes Europe will stop importing Russian oil by the end of the year. However, questions remain.
European Commission President Ursula von der Leyen announced the details of a planned sixth package of sanctions against Russia on May 4, which includes the bold oil move.
As soon as the proposal was announced, Hungary and Slovakia expressed strong reservations.
Hungarian Prime Minister Viktor Orban says the move would devastate his country’s economy, and suggested Russian shipments through pipelines should be exempted from a ban that could apply only to sea deliveries.
Both Hungary and Slovakia received between 75 and 100 per cent of their oil imports from Russia last year.
Now, the Commission wants all EU members to stop all Russian crude oil imports within six months and only import refined products such as petrol, diesel, or kerosene into the European Union until the end of the year.
Moreover, the EU seeks to ban shipping and insurance companies from dealing with Russian oil.
“This measure aims to leverage Russia’s high dependency on Western insurers and shippers and to deter third countries from backfilling,” Maria Shagina, visiting senior fellow at the Center on US Politics and Power and the Finnish Institute of International Affairs, told Al Jazeera.
“The absence of a European energy embargo currently constitutes the major weakness in the Western sanctions regime.”
Most EU sanctions against Russia so far have emerged from EU Council decisions and regulations, and are essentially amendments to measures imposed on Russia after it annexed Crimea in 2014.
Since the start of the current war in February, the EU Council has continued to amend these decisions and their accompanying regulations, which are enforceable by EU law.
For von der Leyen’s desired “complete ban” on Russian oil to be enforced, all 27 member states must vote unanimously on a set of terms, further amend previous decisions and allow the Commission to serve as the key enforcer for the regulations.
“This is a very powerful tool at the EU’s disposal, but it requires unanimous consent from all member states. The ban would become part of the EU’s Common Foreign and Security Policy, its main foreign policy arm,” William T Daniel, assistant professor in comparative politics at the University of Nottingham, told Al Jazeera.
“Unlike in other areas where the EU has complete autonomy to act, foreign policy is still left up to the collective agreement of the member states. If the EU cannot find a way to get all 27 members to agree to a unified set of terms, then it cannot fully act in this area,” Daniel added.
As well as Hungary, Slovakia and the Czech Republic, Croatia, too, is considering an exemption. Bulgaria also has reservations.
“More than 90 percent of Slovakia’s oil imports come from Russia, mostly through the Druzhba pipeline. Slovakia is also a landlocked country and importing any oil through the sea would be a highly cumbersome process that would cost far more than importing Russian oil through a pipeline,” Hari Seshasayee, global fellow at the Wilson Center, told Al Jazeera.
“Any EU-wide ban will lead to more disruptions in oil prices and also to shortages across Europe, specifically in countries that depend on Russian oil for more than half of their total imports.”
Currently, such a list includes eight countries – Czech Republic; Bulgaria; Poland; Lithuania; Hungary; Finland; Latvia and Slovakia.
“European countries will end up paying far more to substitute Russian oil with alternative sources,” Seshasayee said.
This is one of these reasons why Europe’s de-facto leader, Germany, had resisted an oil embargo for months.
However, after a recent meeting of EU energy ministers, German economics minister Robert Habeck said that Berlin was prepared for a ban on imports, even though the move would not go past Germany “without leaving a mark”.
“The policy shifts of individual member states – particularly Germany – are massive and should not be undersold. Still, all of this takes time to enact. And the longer it takes for the EU to reorient its policy towards an effective ban on Russian oil, the longer the Russian economy will profit from the sale of oil to Europe,” said Daniel.
Oil remains Russia’s most important export commodity, and the EU is therefore under intense public pressure to end or at least severely reduce its dependency.
Since the start of the Ukraine war, payments by member states for Russian oil have totalled more than 20 billion euros ($21bn), and with the loss of Russian quantities on an already tense oil market and amid a rising oil price, Moscow could end up generating more income, regardless of a ban.
“I think Russia’s total oil production will likely reduce by up to three million barrels per day over the next couple of months, or perhaps even more. Yet, this does not mean their losses are equivalent to the reduction in supply,” said Seshasayee.
“Any type of EU-wide ban will make Russia even more desperate to sell to whichever country can still afford to buy Russian oil – particularly those in Asia, like China and India,” he added.
The EU’s step has also raised the question of why Europe is not attempting to impose pressure via a gas ban.
The level of gas dependency is even more significant, given that about 40 percent or more of European gas imports in 2021 came from Russia.
“In fact, some European countries began importing even more gas from Russia in the immediate aftermath of the war in Ukraine, in preparation for higher gas prices and possible restrictions in imports from Russia,” Seshasayee said.
Besides the economic effects, can an oil ban prevent the killings of innocent civilians?
Much will depend on how quickly Europe can find unity to enact the ban.
“The EU’s oil ban will be a significant step up in sanctions pressure. Given the ban’s design, the impact will kick in next year. In the short term, the main impact will come from self-sanctioning. In the mid-to-long term, there will be energy decoupling between the EU and Russia,” said Shagina.
Nonetheless, there seemed to be consensus among the experts interviewed by Al Jazeera for this article that the EU’s oil ban is necessary to initiate an end to Europe’s energy dependency on Russia but also to harm Russia’s finances in a way that makes a prolonged war unattainable.
EU foreign ministers are next scheduled to meet on Monday, where the issue will take centre stage again.