European Union ambassadors approved on Thursday the proposed partial ban on Russian oil imports into the EU as part of a sanctions package that also aims to cut Russia off the tanker insurance market and limit its ability to redirect seaborne oil exports to third countries.
After weeks of negotiations, the EU leaders clinched a deal late on Monday to ban Russian oil imports via sea by the end of the year. For weeks, Hungary had blocked a decision on an embargo after the European Commission proposed a full ban by the end of the year on all Russian oil imports. The initial proposal was watered down to an agreement on a ban on seaborne imports by the end of the year, with pipeline crude exempted, for now.
EU envoys who met on Thursday approved the plan to ban Russian seaborne imports of crude in six months and refined products in eight months, sources with knowledge of the matter told Bloomberg.
The six sanctions package also kicks Russia’s biggest bank, Sberbank, out of the international banking payment system SWIFT.
In one of the farthest-reaching measures yet, the sanctions package includes a ban on tanker insurance for Russian shipments to third countries, to take effect six months after the package is formally adopted.
The UK and the European Union have agreed to jointly shut off Russia’s access to oil cargo insurance, the Financial Times reported earlier this week, which would severely affect its ability to export crude.
This will likely contribute substantially to the already considerable turmoil in international oil markets, ultimately pushing prices even higher.
“It’s hard to underplay how significant a move this is by the UK and EU. Taking out insurance will have a huge impact on Russia’s ability to export its oil. It’s one of the toughest sanctions Europe has in its armoury,” said RBC Capital markets’ Helima Croft, as quoted by the FT.