The 1970s Arab states used the “oil weapon” of embargoes to punish Western governments for supporting Israel. On May 30th the heads of the 27 eu member governments agreed to turn the weapon on themselves, as part of their latest round of sanctions against Russia following its invasion of Ukraine. As well as cutting off Sberbank, Russia’s largest bank, from the swift cross-border payment system, the package will also ban purchases of Russian crude oil and refined petroleum products, such as diesel, by the end of the year. There would, the eu said, be a “temporary” exemption for oil delivered through pipelines. The price of Brent crude oil surged above $120 per barrel on the news, its highest level since March.
In principle, the decision is highly significant. As well as being a demonstration of unity, and the bloc’s willingness to bear economic pain to punish Russia, it cuts one of the few remaining trade ties with the Kremlin. It also imperils one of Russia’s most lucrative sources of foreign-currency earnings. The eu is Russia’s biggest market for crude, buying about half the country’s oil exports.