The EU unveiled a proposal that would phase out imports of Russian crude in six months.
EU Commission President Ursula von der Leyen said that the latest round of sanctions will include a complete import ban on all Russian oil. It would affect all shipments.
On the day, the price of crude oil jumped 3% to $108.39 a barrel. The oil price has risen 40% so far in the year 2022, and is expected to reach $100 a barrel for the first time in a long time.
The EU, which relied on Russia for 25% of its oil and 40% of its natural gas, has been under intense pressure to stop imports of crude as a means of cutting off financing for Moscow's war in Ukraine.
While an oil embargo still hasn't been officially voted through, it is clear that it is the only way forward for the EU and its allies.
He said that Russian fossil fuels are going to be history for western Europe.
Von der Leyen said Wednesday that the oil will be phased out in an orderly fashion, giving member states enough time to find alternative supply and not disrupt global energy markets.
She said in a speech to the European Parliament that they would phase out Russian supply of crude oil by the end of the year.
Russia produces 11 million barrels of crude a day, which is 10% of the world's daily output. Europe buys more than half of the 7 million barrels a day it exports. About two-thirds of the supplies arrive by ship, and the other third by pipelines that stretch thousands of miles across the continent.
Russia has been the target of sanctions since the invasion of Ukraine. Its huge energy sector had mostly escaped unscathed, save for import bans from countries like the US and UK, which buy very little in the way of Russian oil, natural gas or coal.
The market has been losing about 1 million barrels of Russian oil a day in April from traders shunning cargos, and EU sanctions already restricted purchases of Russian crude to only those that are strictly necessary from May 15. The additional 1 million barrels a day would be on top of that in May, according to the boss.
Replacing Russian refined product imports will be difficult. Diesel, fuel oil that runs heavy-duty vehicles and machinery, and inputs for petrochemicals are included.
Most regions around the globe have a very tight middle distillate market. ING strategist Warren Patterson said that inventories in the US, Europe and Asia are at multiyear lows because of risks around Russian supply, lower Chinese exports, and recovering demand following Covid.
Natural gas is less likely to be targeted for restrictions because of the EU's dependence on it. The relationship is not exclusive. According to EIA data, the bloc takes almost all of Russia's gas exports.
Benchmark European prices have shot up by 50% so far this year. Dutch gas futures were up 5.35% on the day.
EU sources said that Hungary and Slovakia will get longer to phase out purchases of Russian crude oil. The Wall Street Journal reported that they will have a 20-month phaseout after the end of 2023.
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