Significant oil and gas sanctions remain the missing piece from the EU's expanding list of sanctions on Russia, which now include Russian coal. The economic pain the EU is willing to endure continues to limit how much of its moral outrage over the Ukraine invasion is translating into sanctions on Russia.
The implications are that Russia can prosecute its war for longer and that the 'West' will find it hard to bring countries such as India, and the 27% of countries that did not support the UN resolution condemning Russia on 2 March, into its camp.
German Chancellor Olaf Scholz's words at the end of March that any immediate Russia fossil fuels embargo "from one day to the next would mean plunging our country and the whole of Europe into a recession" echo as loudly, in practical terms, as the omission of any reference to Russian involvement in atrocities in Bucha, Ukraine, during the 5 April meeting of the UN Security Council by representatives of India (TS Tirumurti) and China (Zhang Jun).
Whether India or China, or the other countries attempting to tread a 'neutral path', should adopt, at least, a more condemning tone of Russia in their rhetoric is another question.
EU ban on Russian coal, not oil and gas
The exclusion of oil and gas sanctions, thus far, conveys that for all the rhetorical moral outrage over Russia-Ukraine conveyed by leaders across the EU, except for Hungary, there is a limit to the economic pain the EU is willing to endure in its imposition of sanctions on Russia.
The EU ban on Russian coal imports, announced on 5 April, sounds impactful. After all, almost half of the EU's coal imports are sourced from Russia. The coal commodity price in Europe is up over 15% since before these new sanctions were announced.
However, coal accounts for under 10% of total EU energy imports. In contrast, crude oil and natural gas imports from Russia account for c45% and 30%, respectively.
In turn, the exposure to imports of Russian gas, which is less fungible than crude oil given dedicated gas pipeline infrastructure and lack of alternative LNG regasification infrastructure, varies widely across European countries.
Clearly, the cost of translating moral outrage on Ukraine to sanctions on Russian gas imports varies proportionately to this exposure. It is much more economically costly for Italy, Hungary or Germany to support sanctions on Russian gas than for Spain or Sweden, irrespective of the moral position of their political leaders and societies.
Latest EU sanctions package
The proposed fifth package of EU sanctions announced on 5 April include:
Import ban on coal from Russia;
Full transaction ban on four Russian banks that, in aggregate, account for almost one-quarter of Russia's banking system;
Ban on Russian vessels entering EU ports and for Russian road transport operators, but with exemptions for food and energy;
Export bans on certain industrial products, such as quantum computers and advanced semiconductors, to Russia;
Import bans covering sectors specific to Russian oligarchs (eg wood, cement, seafood and liquor); and
Ban on Russia companies participating in public procurement in the EU.
The EU states it is still working on potential oil sanctions.
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