The European Union is about to deliver its biggest economic blow yet to Russian President Vladimir Putin: cutting off all E.U. imports of Russian oil. It won’t happen overnight. The proposal unveiled on Wednesday calls for a phaseout of Russian oil imports over the next six months and a ban on all Russian petroleum products by the end of the year. Still, it’s a huge turning point for Europe that is long overdue.
The E.U. has built a heavy reliance on Russian energy despite warnings from the United States and other allies. Before Putin brutally invaded Ukraine, the E.U. relied on Russia for a hefty 30 percent of its oil and 40 percent of its gas needs, according to Swiss bank UBS. Putin was counting on this dependence to keep the E.U. from pushing back too hard against his assault on Ukraine. Instead, the E.U. is showing a greater unity and willingness to sacrifice for Ukraine and the global good than most would have imagined possible only a few months ago.
President Biden halted Russian oil and natural gas imports on March 8, a largely symbolic because the United States imported little from Russia. The E.U. ban will have real consequences, including a tangible financial blow to Putin. While Russia is likely to find other nations to buy some of the oil that would have gone to Europe, it will likely be a struggle to sell it all, and there will almost certainly be more discounting.
All 27 E.U. countries must agree to this dramatic move. Hungary and Slovakia — two of the nations most dependent on Russian energy — are holdouts on the deal. It is likely these nations will get a much longer timeline for a complete ban. More importantly, the latest E.U. move does not say anything about banning Russian natural gas imports, meaning plenty of E.U. money will still be flowing to Putin for now. But the E.U. should move swiftly and decisively this week to enact the oil ban and send a message to Putin that the atrocities Russia is committing in Ukraine are not acceptable.
As Ursula von der Leyen, president of the European Commission, said on Wednesday, “Putin wanted to wipe Ukraine from the map. He will clearly not succeed.”
The short-term fallout from the ban will be harsh. In the United States, diesel prices have hit record highs in recent days. Crude oil prices are back above $100 a barrel and jumped again after the E.U. proposal was unveiled. The E.U. is scrambling to find more sources of crude oil and natural gas. Its members can get some additional supplies from Norway and the United States, but a heavier reliance on North Africa and Middle Eastern supplies is inevitable. For Biden, his best choice is likely to get Venezuela to ramp up oil production.
Soaring energy prices are clearly a hardship. But it’s important to remember how much progress has been made. Germany is a good illustration; it has reduced its Russian oil imports from 35 percent of its needs last year to 12 percent now, coal from 45 percent to 8 percent, and natural gas from 55 percent to 35 percent. It’s better late than never for the E.U. to wean itself off Russian energy.
