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EU prepares for embargo on Russian oil

The European Union is preparing for a total ban on the import of Russian oil, with possible exemptions for countries dependent on the supply. EU ministers held crisis talks on Moscow’s demand that foreign buyers pay for gas in roubles or lose their supply.

The European Commission is expected to propose the sixth package of sanctions against Russia over its invasion of Ukraine, including an embargo on buying Russian oil. Such a measure would deprive Moscow of a large revenue stream, but may also pose a problem for some countries.

Hungary and Slovakia are heavily dependent on Russian crude oil. The former has said it would oppose drastic sanctions as they would threaten the country’s energy safety.

To keep the 27-nation bloc united, the European Commission may offer Hungary and Slovakia an exemption or a long transition period – with the overall ban likely to be phased in by the year-end.

Resistance from other countries to an oil embargo appeared to be fading ahead of a meeting on Wednesday when ambassadors will discuss the sanctions.

“We have managed to reach a situation where Germany is able to bear an oil embargo. This means it won’t be without consequences,” German economy minister Robert Habeck said.

Austrian climate and energy minister Leonore Gewessler said Vienna would agree to oil sanctions if other countries did.

At the moment Russia supplies 40 percent of EU gas and 26 percent of its oil imports. EU countries have paid an estimated USD 47.5 billion to Russia for gas and oil since it invaded Ukraine on February 24.

EU ministers to discuss Russian demands in gas trade

EU energy ministers will also attempt to forge a joint response to Russia’s demand that countries effectively pay for gas in roubles after Russia cut gas supply to Bulgaria and Poland last week for refusing to comply with its payment scheme.

“Russia’s demand on payments in roubles is an obvious attempt to divide the European Union. So we must respond in unity and solidarity,” EU energy commissioner Kadri Simson said.

An immediate cut-off of Russian gas would tip countries including Germany into recession and require emergency measures such as factory closures to cope, according to analysts.

With many European companies facing gas payment deadlines later this month, EU states are attempting to clarify whether companies can keep buying the fuel without breaching the EU’s sanctions against Russia over its invasion of Ukraine.

Moscow demands all foreign gas buyers to deposit euros or dollars into an account at a Russian Gazprombank, which would convert them into roubles.

The Commission last month told countries that complying with Russia’s scheme could breach EU sanctions. But it also said countries could make sanction-compliant payments if they declare the payment complete once it has been made in euros and before its conversion into roubles.

Poland claims that using Moscow’s roubles payment scheme would breach sanctions, and asked the Commission to make this clear. Bulgaria also refused to engage with the Russian scheme before Moscow cut its gas supply.

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