EU reaches deal on ban of most Russian oil imports

European Union leaders reached a breakthrough late on Monday night to sanction Russian oil by exempting pipeline deliveries in a deal leaders said would bar two-thirds of imports and hit Moscow’s financial ability to wage war in Ukraine.

The agreement must still be converted into a legal text, meaning diplomatic work lies ahead to finesse the details, but was welcomed as a breakthrough after a month in which the opposition of Hungary prevented the EU’s sixth package of sanctions from coming into force.

German chancellor Olaf Scholz said the EU was “united” while European Council president Charles Michel said the measure would cut “a huge source of financing” for Russia’s “war machine”.

The package of measures will also bar Russia’s largest bank Sberbank from the Swift messaging system, ban three Russian state-owned broadcasters, and add individuals implicated in the war to the EU’s sanctions list.

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Mr Michel also announced that the EU was also prepared to give Ukraine €9 billion in financial support, to help with immediate liquidity needs and eventual reconstruction.

Ukrainian president Volodymyr Zelenskiy had urged the 27 leaders to show unity as he addressed the Brussels summit over video link.

[ What does EU’s partial oil ban mean for Russia and rest of Europe? ]

[ Taoiseach warns of high energy prices as he welcomes EU’s partial ban on Russian oil ]

“Why can Russia still earn almost a billion euros a day by selling energy resources?” he asked them, according to a text of the address released by his office.

“The sixth sanctions package must be agreed upon. It must be effective – including oil. So that Russia feels the price of what it is doing against Ukraine and against the whole of Europe. And for you and us to finally become independent from Russian energy weapons.”

Hungarian opposition had been the biggest obstacle preventing the EU’s sixth package of sanctions from being agreed almost a month since it was first proposed by the European Commission.

The ban on oil imports from Russia poses serious energy challenges to some landlocked eastern member states, namely those dependent on Russian oil due to infrastructural links built up since Soviet times.

But Hungary’s right-wing leader Viktor Orban has exploited the issue in domestic politics, casting himself as standing up to the proposed oil ban as the latest example of EU over-reach that victimises Hungary. “Hungary’s energy supply and the future of Hungarian families are at stake,” his official account posted on Facebook yesterday, sharing an image of him arriving at the European Council meeting in Brussels with the caption “battle begins”.

Ahead of the summit, diplomats worked late into Sunday and met early yesterday in a bid to eke out a compromise.

The 27 leaders were presented with a proposed compromise to ban “all seaborne oil from Russia”, according to an EU official. In addition, some member states would be granted “temporary exceptions . . . to ensure security of supply”.

The draft conclusions read that the ban “will cover crude oil, as well as petroleum products, delivered from Russia into member states, with a temporary exception for crude oil delivered by pipeline.”

Dutch prime minister Mark Rutte insisted this did not entail “watering down” the package. Together with plans by Germany and Poland to stop using Russian oil, ending shipments would cut out “90 per cent” of imports, he told reporters.

But while Mr Orban described the pipeline exemption as a “good approach”, he insisted there was not yet a deal and Hungary needed more.

“We need to guarantee that in the case of an accident . . . we have to have the right to get Russian oil from other sources,” he said, indicating that Hungary should have an exemption for shipped oil as well.

He unleashed criticism of the European Commission, telling reporters it should not have made the oil proposal in the first place. “We are in a very difficult situation, basically because of the irresponsible behaviour of the commission,” he said.

Hungary’s dispute with the commission predates the war, as the administration of commission president Ursula von der Leyen has sought to make the release of EU funds contingent on respect for the rule of law, and has held back Budapest’s slice of Covid-19 recovery money due to concerns about democratic backsliding, eroding media freedoms and judicial independence.