The EU pushes toward phasing out Russian oil but faces opposition

Last week, the EU proposed a sixth round of sanctions against Russia. But some EU countries are still not totally on board with the idea, specifically when it comes to an all-out ban on Russian oil. For example, Hungary isn’t so crazy about the idea, as it gets more than half of all its oil imports from Russia.

Initially, the EU offered Hungary, Slovakia and the Czech Republic an extension to comply with the sanctions since they rely so much on Russian oil. But Hungary has rejected the offer, seeking a longer transitional period. Bulgaria recently joined in blocking the proposal unless it also receives a similar exemption.

European Commission President Ursula von der Leyen traveled to Hungary on Monday to continue talks with Hungarian Prime Minister Viktor Orban, later tweeting that they “made progress, but further work is needed.”

Russia is still struggling as a result of Western sanctions, with its crude output dropping by almost 1 million barrels a day so far, according to several industry sources and analysts.

Key comments:

“The proposal on behalf of Brussels is suggesting that it should be done by the end of next year," said Zoltan Kovacs, spokesperson for Hungarian Prime Minister Viktor Orban. “The shortest period, we’ve been clear on that, our oil companies have been clear on that, is three to five years."

“The very essence of decision-making in Europe is consensus,” said Kovacs. “We’ve been telling Brussels and all the European states, that on Hungary’s behalf, it simply cannot be done as they require."

“Russia’s ability to redirect all unwanted cargoes from the West to Asia are limited, meaning that, in the case of embargoes, Russia will be forced to cut production further as it lacks storage capacity for extra crude volumes," said analysts at Rystad Energy, a Norway-based energy research firm.