EU leaders have finally agreed to ban most oil imports from Russia, unlocking a sixth round of sanctions aimed at curbing the Kremlin's ability to finance a brutal war against Ukraine..

It's not a perfect solution, it came too late. It includes numerous concessions that stretch the execution in time and satisfy all the requirements of Hungary.. Sanctions against Russian gas remain out of discussion. At the same time, the new agreements on the oil embargo are still an important step. Bloomberg writes about this, proposing to consider, first of all, the shortcomings of the EU decision..

The agreements of European governments came humiliatingly late. Europe has been expressing indignation at the actions of the Russian army for several months, while actually helping it to wage war by transferring money for Russian energy.. Since the beginning of the Russian invasion of Ukraine, EU countries have paid Moscow 57 billion euros for oil and gas supplies, according to the Center for Energy and Clean Air Research.. And the Europeans are only now beginning to do something about this weak moral and diplomatic position.. As for gas, the plan here is to cut demand and increase non-Russian supplies.. The European Commission hopes that this will allow for a sharp reduction in imports this year, and then lead to energy independence..

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It is alarming that after a startling display of unity and speed at the start of the invasion, now the EU countries have been arguing and bargaining for a very long time before deciding to cut oil imports.. It exposed the cracks in Europe, which will only please Moscow. Discussions ended with big concessions in favor of Hungarian Prime Minister Viktor Orban, who proved able to block agreements for many weeks, putting his own interests above collective security.. And this is a disturbing precedent. As a result, the sanctions will only block the supply of oil from Russia by sea.. And imports via the Druzhba pipeline will remain a “temporary exception” that leaders will return to “as soon as possible”. The written statement of the decision also describes emergency measures to “guarantee supplies” of oil to Orban if the flow of oil through the pipeline suddenly stops..

The rest of the compromises take time. And some of the imposed restrictions will take effect 6 or 8 months after approval.. Important and weighty steps, such as banning EU shipping companies from transporting Russian oil, were rejected altogether.. At the same time, the EU's decision to ban Russian oil, although limited, is an important achievement that was not possible just a few months ago.. Even an imperfect embargo would be painful for the Kremlin and send an important signal of intent. If Germany and Poland keep their promise and get rid of dependence on oil from pipelines, then the EU decision will affect 90% of Russian oil imports to Europe by the end of the year.

The impact on the markets for oil and petroleum products will be powerful. Russia is by some estimates the largest fuel exporter in the world (the US sells significantly larger volumes, but this is mostly fuel made from oil bought from other countries). European imports of Russian diesel are part of the global sales of this product. And in a matter of months, this part of the market will simply be eliminated.. European diesel futures averaged $630 per ton over the past 10 years. Now they sell for about double the price.. Inventories at the European oil trading hub hit levels not seen since 2008, when a barrel of Brent oil cost $146.

Now this oil costs $123 per barrel.. The Oxford Institute for Energy Studies believes that after the introduction of even such a limited embargo by the EU, the price will jump to $150 per barrel in July.. This will put a lot of pressure on diesel-dependent European heavy industry, which is already struggling due to high fuel prices.. Inflation will accelerate even more, making electric and hybrid cars even more attractive. In the short term, it is clear that Europe will be hurt and Russia will benefit from rising prices.. But the long-term consequences will be just more problematic for Moscow.. She can't turn off supplies without repercussions.. And the sanctions that relate to marine insurance will make sure that all restrictions cannot be bypassed.. Because such services are mostly provided by companies from Europe, the USA and allied countries.

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Sanctions didn't often change the behavior of authoritarian regimes that believed they were pursuing the national interest.. But this time, the goal of the restrictions is clear enough – to isolate and deprive the Kremlin of financial sources.. Despite Russia's large current account surplus and the fact that capital controls have inflated the value of the ruble, the measures taken by Brussels and Washington have already begun to take effect.. The consequences of the ban on the sale of important components to Russia showed the limits of the Russian substitution program. For example, Aeroflot will soon be forced to dismantle aircraft for spare parts..

War has always been acutely dependent on funding.. By cutting off the flow of dollars into the Kremlin's coffers, Europe is making it harder for Russia to maintain its bellicose demeanor.. Even imperfect sanctions are better than none at all.