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E.U. to ban majority of Russian oil imports. Here’s why it matters

A sixth round of European Union sanctions may be imposed on Russia, targeting 90% of oil imports

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An oil rig near the town of Usinsk, Russia.

An oil rig near the town of Usinsk, northeast of Moscow, is pictured on Sept. 10, 2011. The European Union’s executive commission has proposed phasing out imports of Russian oil within six months. It is part of Europe’s struggle to stop paying Russia $850 million a day for energy and hit the Kremlin’s finances over its invasion of Ukraine.

Dmitry Lovetsky, Associated Press

After weeks of negotiations, European Union leaders agreed on banning a majority of Russian oil imports, according to European Council chief Charles Michel.

Driving news: Michel said that the new sanctions will be legally endorsed on Wednesday, with the support of 27 countries.

  • “Agreement to ban export of Russian oil to the EU. This immediately covers more than 2/3 of oil imports from Russia, cutting a huge source of financing for its war machine,” Michel said in a tweet on Monday.

Details: This sixth round of sanctions has a few other targets: disconnecting Sberbank, Russia’s largest bank, from the SWIFT banking payment system, banning 3 additional Russian state-owned broadcasters, and sanctioning those responsible for committing war crimes, Michel said in his tweet.

Yes, but: Many countries that are a part of this agreement will either get extensions or exceptions.

  • “As we have a clear political statement by Poland and Germany that they will, as the others, wind down Russian oil, until the end of the year. We have covered overall 90 percent of Russian oil being wind down during this time frame,” said Ursula von der Leyen, president of the European Commission, per CNN.
  • “Leftover is the roundabout 10 or 11 percent that is covered by the southern Druzhba. We have agreed for the moment being for an exemption,” she added.

Worth noting: Natural gas isn’t addressed through these sanctions, even though the Russian supply accounts for 40% of EU imports.

State of play: Oil prices saw a hike on Tuesday as “international benchmark Brent crude futures rose 1.5% to $123.48 a barrel, while U.S. West Texas Intermediate futures climbed 3% to $118.56,” per CNBC.

Meanwhile, Russia is already searching for new importers, as Russian official Mikhail Ulyanov said in a tweet on Monday.