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By Kate Abnett, Jan Strupczewski and Ingrid Melander
BRUSSELS (Reuters) – European Union leaders have agreed to an embargo on imports of Russian crude that will take effect until the end of 2022, but Hungary and two landlocked central European states have received exemptions for imports of pipelines in which they end.
The ban, agreed overnight after weeks of disputes, aims to halt 90 percent of Russian crude imports into the 27-nation bloc by the end of the year.
This is the harshest sanction yet imposed on Russia for its invasion of Ukraine, and it will affect the EU, where energy costs have soared and inflation is close to a double-digit clip.
Russia accounted for just over a quarter of eu oil imports in 2020, while Europe is the destination for nearly a fraction of Russia’s crude and oil exports.
“The sanctions have a transparent objective: to incite Russia to end this war, withdraw its troops and agree on a moderate and just peace with Ukraine,” German Foreign Minister Olaf Scholz said.
The oil embargo follows an earlier ban on Russian coal and the bloc imposing a sixth sanctions circular that includes the removal of Russia’s largest bank, Sberbank, from the SWIFT foreign transaction system.
Ukrainian President Volodymyr Zelenskiy said that once the sixth circular is in force, “we will begin to prepare for the seventh. “He predicted that the embargo would deprive Russia of tens of billions of euros.
“Ultimately, there will be no more significant economic relations between the lax global state and the terrorist,” he said Tuesday in an evening speech.
Zelenskiy had in the past criticised what he called an “unacceptable” delay of more than 50 days from the previous EU package.
French President Emmanuel Macron said nothing can be ruled out in relation to the new sanctions, other leaders rejected the idea of banning purchases of Russian gas, on which Europe relies heavily.
EU countries will have six months to avoid imports of Russian crude transported by sea and eight months for subtle products.
This timeline will begin once the sanctions are officially adopted, which EU states intend to do this week.
EXEMPT HUNGARY
The deal was only reached after other EU leaders agreed to give Hungary a pass.
Two-thirds of Russian oil imported through the EU comes through oil tankers and the rest from the Druzhba pipeline.
Poland and Germany are among the importers by pipeline, but have pledged to avoid buying Russian oil until the end of 2022.
Hungary, Slovakia and the Czech Republic, landlocked countries, source their Russian oil from Druzhba and account for 10% of embargo-exempt imports.
Bulgaria said it was also granted an exemption until the end of 2024, as its refinery is designed to source Russian crude. eurozone countries this month.
THE NEXT GASOLINE?
Ursula von der Leyen, head of the bloc’s executive board, said the package would also prohibit European corporations from insuring or reinsuring ships using Russian oil.
Several countries already need to start running a seventh round, but Austrian Chancellor Karl Nehammer said it could come with Russian gas, which covers a third of the EU’s needs.
“Russian oil is a lot to compensate . . . the fuel is absolutely different,” Nehammer said.
Russian analysts and investors said the slow advent of the embargo has given Moscow time for new consumers in Asia.
“Although the measures announced by the European Union seem threatening, we do not see a crippling effect on the Russian oil sector, neither imminent nor in six months,” said analysts at Sinara Investment Bank.
EU leaders also called on the committee to explore features to tackle rising energy values. These come with “import value time limits,” which will be explored with foreign partners, according to their findings.
They also backed a Commission plan to wean the EU off all Russian fossil fuels within a few years through faster deployment of renewable energy, energy-saving innovations and more investment in energy infrastructure.
And they called for greater contingency across the EU by making plans for new fuel source crises. Moscow on Tuesday cut off fuel supplies to the Netherlands for rejecting its ruble fuel program, having cut off Poland, Bulgaria and Finland. .
(Additional reporting via Gabriela Baczynska, Sabine Siebold, John Chalmers, Bart Meijer, Robin Emmott and David Ljunggren; Written through Ingrid Melander, Kate Abnett; Edited through John Chalmers, Tomasz Janowski and Grant McCool)