A tariff on Russian oil could pave the way to an embargo

A tariff on Russian oil could pave the way to an embargo

The EU’s economy commissioner Valdis Dombrovskis this week summed up the dilemma as the bloc struggles to agree on an embargo on Russian oil. “We are discussing massive financial support to Ukraine on one hand, and continue to provide financing for Russia’s war on the other hand,” he said. “It needs to be stopped.” A ban on Russian imports should remain the priority. But an interim measure designed to stem Moscow’s profits from energy sales more quickly — a punitive EU tariff on Russian oil, proposed by the US and others — is worth looking at too.

An embargo choking off the 3.4mn barrels a day of oil and oil products that Russia exports to the EU would be a stunning blow to its revenues. But an EU embargo is vigorously opposed by landlocked Hungary, which says it is less able than coastal states to source alternative oil, and its refineries are set up to process Russian crude so require costly conversion. Bringing Budapest round is likely to need financial support and a phase-in period for an embargo.

A phased-in ban would allow time for negotiations with other potential suppliers — and would be a sword of Damocles for Russia’s flagship industry.