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The EU says it will cut 90% of Russian oil imports by the end of the year. Here’s why it can’t get rid of that remaining 10%

May 31, 2022, 10:16 AM UTC

After weeks of negotiations, European leaders finally announced their plans to bar imports of Russian oil, eradicating 90% of the economic bloc’s Russian oil imports. But the embargo contains at least one major exception: Oil imported through pipelines is still okay to buy.

On Monday, the European Union declared it will bar seaborne imports of Russian crude oil within six months, and ban shipments of refined petroleum products within eight months, effectively eradicating two-thirds of Europe’s oil imports from Russia. EU members Germany and Poland announced that they would go even further in voluntarily barring all oil imports from Russia—and not just those arriving by tanker—by the end of the year.

Ursula von der Leyen, president of the European Commission, tweeted that, taken together, the moves would “effectively cut around 90% of oil imports from Russia to the EU by the end of the year.”

International oil prices jumped on the news, with U.S. crude futures for July swelling 3.5% to $119.12, while Brent crude futures rose 1.87% to $123.95. Meanwhile, U.S. crude hit close to $119.42 per barrel—a 12-week high.

The near-complete oil embargo is part of the sixth package of economic punishments the EU has unleashed against Russia since the Ukraine invasion, and includes sanctions on individuals like Patriarch Kirill of the Russian Orthodox Church, bans on three Russian state broadcasters, and ejecting Russia’s Sberbank from the SWIFT international payments system. 

Yet if Europe has pledged to cut 90% of its oil imports, where is the remainder going?

Landlocked

European rules require unanimous consent among leaders of the bloc’s member states on certain areas deemed to be sensitive, like foreign and security policy. The oil embargo contains an exemption for Russian oil imported via pipeline, which is a concession the bloc made in response to objections from several European countries, concerned that a full import ban would damage their economies.

Russian oil flowing into Europe via pipeline travels through the Druzhba pipeline, named after the Russian word for “friendship.” The route is the world’s longest oil pipeline, funneling crude over 3,400 miles from Siberia to Europe via Belarus.

After entering Belarus, the Druzhba splits into two branches. The northern branch continues on to Poland and Germany, while the southern branch travels through northern Ukraine into Hungary, Slovakia, and the Czech Republic. 

Hungary was perhaps the biggest opponent to a full ban on Russian oil. Prime Minister Viktor Orbán—Russia’s closest ally in the EU—lambasted a complete oil embargo as an “atomic bomb” for the country’s economy. Orbán took to Facebook on Monday to announce that “Hungary is exempt from the oil embargo!” owing to the exemption for oil imported via pipeline.

Pipelines

Both Poland and Germany, which volunteered to completely eliminate their Russian oil imports, have access to the sea and can thus more easily get oil from other sources, such as the U.S. Hungary, Slovakia, and the Czech Republic, as landlocked countries, have fewer alternatives available.

Hungary imports 65% of its oil through the Druzhba pipeline. In negotiations with European officials, Hungary argued that it needed financing to convert its refineries to handle non-Russian oil and to expand an alternate pipeline from Croatia. In early May, Hungarian foreign minister Péter Szijjártó claimed the bill could run as high as $800 million.

Other Eastern European countries are even more reliant on Russian pipelines. Slovakia got almost all of its oil imports from Russia in 2021, almost entirely through the Druzhba pipeline. Slovakia argued that it needed until 2025 to wean itself off of Russian oil, rather than the one-year extension initially offered by the European Commission.

The Czech Republic, which gets about half its oil imports from Russia primarily through the Druzhba pipeline, also asked for a transition period of at least three years. Bulgaria said it, too, could not support a Russian oil embargo that did not grant the country an extension. (Bulgaria eventually got additional time before being required to halt seaborne oil imports from Russia.)

In the end, countries like Hungary and Slovakia may have as much time as they want. Despite von der Leyen saying the Druzhba exemption would be revisited “as soon as possible,” the final deal announced on Monday has no end date for the exemption on Russian oil imported via pipeline.

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