European diplomats will try to agree an embargo on Russian oil tomorrow, May 30. clarified Reuters sources. An extraordinary summit will begin in Brussels on 30-31 May and, as expected, the EU may declare an embargo.
By contrast, Bloomberg authorHe said diplomats will discuss the embargo next week.
“There are still a lot of details to be resolved,” a senior EU diplomat told Reuters.
An EU official said countries could still agree on an embargo in the coming days. The European Union can impose sanctions only with the consent of all member states.
European Commission President Ursula von der Leyen warned on 24 May that EU leaders are unlikely to agree on an oil embargo against Russia at the 30-31 May summit.
“I don’t think the summit is the right place for it,” he explained.
While the Von der Leyen Commission recommends that most EU member states phase out Russian oil imports by the end of the year, Hungary and other countries could be given more time. Von der Leyen said on May 24 that if Brussels immediately placed an embargo on Russian oil, Russian President Vladimir Putin could “transfer oil, which he probably did not sell to the European Union, to the world market, where prices would rise.” and you will get a large amount for it. “. According to him, this will “further replenish the military treasury” of Russia.
Banning Russian oil could be included in the sixth package of EU sanctions. In addition to oil, it includes the removal of Sberbank from SWIFT and more personal sanctions.
The entire package was delayed by Hungary. The country’s officials feared that the Hungarian economy would “be killed without Russian fuel” as it could not easily obtain oil from other sources. Similar concerns were expressed by Slovakia and the Czech Republic.
Negotiations continue for a month. To break the stalemate, the European Commission suggested that the ban only apply to Russian oil brought into the EU by tankers. Thus, Hungary, Slovakia and the Czech Republic could continue to receive Russian oil through the Russian Druzhba pipeline until alternative sources are found.
Some countries have previously opposed the separation of sea and pipeline supplies, fearing that such a separation would unfairly affect prices. Others worried that the proposed compromises would soften the sanctions package too much.
Currently, the problem is still in Hungary, according to Reuters sources. Now Budapest is asking for money from the EU. Hungarian authorities declared that the capacity of Druzhba was insufficient and therefore the pipeline had to be expanded. For this, Hungary requests additional funds from the EU.
In addition, Budapest is requesting funds to help the country switch its refineries from Russian Ural crude to Brent crude.
“We will need additional investments of 550 million euros in order to technologically transform the refining process and process oil not from Russia,” said Péter Szijjarto, Hungarian Minister of Foreign Affairs and Foreign Economic Relations.
Rikard Jozwiak, journalist for Radio Liberty (the organization is included in the list of foreign agents by the Ministry of Justice), stated on 29 May that Hungary “requires additional exemptions” from the sanctions.
“There are also those who do not agree with the ban of Russian citizens to buy real estate in the EU,” the reporter said.
According to Bloomberg, the European Commission, as part of its sixth package of sanctions, planned to veto all transactions by Russians and Russian companies with real estate in the European Union and ban the transfer of property rights to them. We’re talking about anyone who doesn’t have EU citizenship or a residence permit. According to Bloomberg sources, these restrictions were removed from the final version of the package under pressure from Cyprus.
“We’ve seen what can happen when Europe comes together after Russia’s attack on Ukraine. Let’s hope this continues. But now [европейское единство] It’s starting to collapse,” German Economy Minister Robert Habeck said on May 29.
Bloomberg notes that the bulk of oil supplies via pipeline from the Russian Federation fell to Germany and Poland. They have already made it clear that they will reject supplies from Russia regardless of the EU’s actions.
Meanwhile, against the backdrop of unprecedentedly harsh sanctions, oil suppliers from Russia trying to get around limitations. The United States and Britain had previously refused to import Russian oil.
In addition to restrictions on direct oil, sanctions on the largest Russian banks also play a role. Due to restrictions on VEB and Promsvyazbank, Russia lost its fleet of leased tanks. According to Forbes, after the new restrictions, Western banks began to block any financial transactions with Russian counterparties and refuse to finance buyers of Russian oil.
“People simply reject Russian oil. It’s all worth it, no deals, ”said a Forbes source.
But other traders say Russian oil can be sold abroad, but at a record discount. Traditionally, Russian-grade Urals were sold for 1.5-2 $ cheaper than Brent. Now discounts in the Urals began to reach 35-40 dollars. In addition, if earlier Russian oil companies demanded prepayments and guarantees from buyers, now increasingly they agree to delay payment for 30 days or more, in fact, they sell oil on “parole”.
Another gap is “mixed oil”. This is a tried and tested plan by Iran and Venezuela. A ship with Russian oil on the high seas dumps it into another tanker, where it is mixed with residues of different quality. The new blend is nearly identical in composition to Russian oil, but could be sold to the UK or the US “without any problems,” according to a Forbes source.
Russian authorities closed data on oil exports on the backdrop of sanctions. The Energy Ministry said the information could be used “as additional pressure on the Russian market and its participants.”