European Union States Push For Sanctions on Russian Energy

Disagreements persist among member nations

European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium, on May 5, 2021. Countries in Europe remain divided on how to sanction Russia. Yves Herman/Reuters

Some members of the European Union are demanding sanctions to be imposed on energy imports from Russia on account of Moscow’s invasion of Ukraine while the price of oil rebounds amidst fears of new sanctions, the ongoing war, and supply issues.

“Looking at the extent of the destruction in Ukraine right now, it’s very hard to make the case that we shouldn’t be moving in on the energy sector, particularly oil and coal,” Irish Foreign Minister Simon Coveney said at a meeting of EU foreign ministers on March 21.

Lithuania’s Foreign Minister Gabrielius Landsbergis agreed with his Irish counterpart, stating that “it’s unavoidable we start talking about the energy sector, and we can definitely talk about oil because it is the biggest revenue to Russia’s budget.”

The EU has already slapped a number of sanctions on Russia, excluding seven Russian banks from the SWIFT international payment system and freezing assets of the Russian central bank. However, it has not yet imposed any major sanctions on Russia’s energy exports, mostly due to the fact that the region is heavily dependent on it. Roughly 40 percent of the EU’s gas supply comes from Russia.

Countries like Germany and Italy are heavily reliant on Russian gas, while Poland and Denmark rely on Russian coal.

Dutch PM Mark Rutte has warned that cutting off the EU from Russian oil and gas in the near-term is not a possibility. Meanwhile, Baltic nations like Lithuania are pushing for an oil embargo.

Russia has warned Europe against sanctioning the country’s energy exports, with Kremlin spokesperson Dmitry Peskov telling reporters on March 21 that such an embargo will have a “very serious impact” on the global oil market and will “badly impact” the energy balance on the continent.

“Americans would remain as they are and would feel much better than Europeans (in the event of oil embargo). This would be hard for Europeans—such a decision would hit everyone,” Peskov said.

Brent crude prices surged on Monday as EU foreign ministers discussed a potential ban on Russian energy. Brent May futures were trading at $114.57 per barrel as of 12:54 p.m. EDT on March 21, up $5 from its opening of around $109.35. U.S. President Joe Biden is due to meet members of the EU, NATO, and G7 nations this week to strengthen the West’s response to Moscow’s attack on Ukraine.

“A Houthi attack on a Saudi energy terminal, warnings of a structural shortfall in production from OPEC and a potential European Union oil embargo on Russia have seen oil prices jump in Asia,” OANDA senior analyst Jeffrey Halley said in a note. “Even if the Ukraine war ends tomorrow, the world will face a structural energy deficit thanks to Russian sanctions.”