EU says Russia’s oil and gas ban is still on the table

The EU is still considering Russian oil and gas embargoes to settle disagreements over how to pressure Moscow to halt its invasion of Ukraine.

I think that sooner or later action will also be needed on oil and even gas,” European Council President Charles Michel, who chairs the regular summits of EU leaders, said on Wednesday the European Parliament.

EU Commission President Ursula von der Leyen told EU lawmakers that further sanctions were on the way.

“Now we have to deal with oil and revenues that Russia derives from fossil fuels,” she said in a speech to the European Parliament.

It comes a day after the EU banned $4 billion worth of Russian coal imports.

Natural gas prices in Europe fell slightly as weather forecasts and currently stable supplies eased some concerns despite uncertainty over future exports from Russia, Bloomberg reported.

Benchmark futures fell as much as 5.1 percent as mild temperatures are expected in the second half of this month and a fleet of liquefied natural gas cargoes are expected to arrive. Wind power is also high in parts of Europe.

For now, stable gas flows from Russia remain in focus, especially after President Vladimir Putin prompted ruble payments for the fuel last week, Bloomberg said.

The impact of this move is still being evaluated by large European buyers, while a number of relatively small consumers have rejected Russian demand, including Lithuania and Denmark.

Russia is ready to cut gas supplies to Denmark if local buyer Orsted AS doesn’t make its next payment in rubles, Borsen newspaper reported, citing Russia’s ambassador to the country, Bloomberg said.

According to a separate report by Bloomberg, Blackrock Investment Group predicts that the war in Ukraine will send the European economy an energy shock dwarfing any impact on the US.

EU countries are expected to spend over 9 percent of their gross domestic product on energy this year, Blackrock researchers write in a report.

That’s the highest rate in 40 years and more than double the projected level in the US, which is likely to remain around its long-term average. Two years ago the figure for both economies was around 2 percent.

The gap reflects the EU’s dependence on energy imports from Russia, particularly natural gas. European fuel prices have soared, far outpacing increases in the US since the Ukraine crisis – and the sanctions imposed in response – threatened security of supply.

“The impact of the energy shock will be greatest in Europe, and we see a risk of stagflation there,” the Blackrock researchers write.

European economies are at odds over how to meet Russia’s energy-powered war machine.

Some countries like Austria and Germany oppose a ban on Russian energy imports because of their high reliance on gas, while smaller economies including Ireland and Lithuania are in favor of hitting Moscow where it hurts.

Additional European sanctions currently being discussed should not target oil and gas.

The US, which has become a net exporter of oil and natural gas in recent years, has announced it will ban purchases of Russian crude.

The Blackrock team said US consumers and businesses would suffer from higher energy prices, but the macroeconomic impact was much smaller than during the energy shock of the late 1970s.

Meanwhile, the website of Gazprom Neft, the oil division of Russian gas giant Gazprom, went down Wednesday after an apparent hack, according to Reuters.

Additional coverage from Reuters and Bloomberg.