EU proposes Russian oil ban to make Putin ‘pay high price’ for Ukraine

As well as sanctions on its top bank and to ban Russian broadcasters from European airwaves, in its toughest measures yet to punish Moscow for its war in Ukraine.

The European Union’s chief executive on Wednesday proposed a phased oil embargo on Russia, as well as sanctions on its top bank and to ban Russian broadcasters from European airwaves, in its toughest measures yet to punish Moscow for its war in Ukraine.

The plan, if agreed by EU governments, would be a watershed for the world’s largest trading bloc, which is dependent on Russian energy and must find alternative supplies.

But Russia’s invasion of Ukraine by land, sea and air on February 24, the renewed Russian offensive in eastern Ukraine and the horrific images of slaughter in Ukrainian towns have overcome reluctance to deliver sanctions that are painful for the EU as well as for Russia.

Reflecting widespread anger in the West at Russian President Vladimir Putin’s campaign – which Moscow says is a “special military operation” to defeat dangerous nationalists – the head of the EU executive said Moscow must face consequences.

“Putin must pay a price, a high price, for his brutal aggression,” European Commission President Ursula von der Leyen told the European Parliament in Strasbourg.

“Today, we will propose to ban all Russian oil from Europe,” she said to applause in the chamber.

The Commission’s measures include phasing out supplies of Russian crude oil within six months and refined products by the end of 2022. Von der Leyen pledged to minimise the impact on European economies.

The price of Brent crude LCOc1 rose around 3% to more than $108 a barrel in early trade.

If agreed, the embargo would follow the United States and Britain, which have already imposed bans to cut one of the largest income streams to the Russian economy, as the West buys more than half of its crude and petroleum products from Russia.

“We are addressing our dependency on Russian oil. And let’s be clear, it will not be easy because some member states are strongly dependent on Russian oil, but we simply have to do it,” she said.

Ambassadors from the EU’s 27 governments are expected to adopt the Commission proposals as early as this week, allowing them to become law soon after.

Risky bet

Less reliant on pipelines, oil can be shipped from other sources and the EU hopes its gradual approach will avoid an oil shock. Diplomats also told Reuters that Hungary and Slovakia could be exempt from the embargo until the end of 2023, due to their high dependency on Russian energy.

Simone Tagliapietra of the Brussels-based Bruegel think-tank said the EU’s gradual embargo on Russian oil was still risky.

“In the short term it might leave Russian revenues high while implying negative consequences for the EU and the global economy in terms of higher prices – not to mention retaliation risks (by Russia) on natural gas supplies,” he said.

Apart from oil, the latest round of sanctions proposes hitting Sberbank, Russia’s top lender, adding it to several banks that have already been excluded from the SWIFT messaging system.

“We de-SWIFT Sberbank – by far Russia’s largest bank, and two other major banks. By that, we hit banks that are systemically critical to the Russian financial system and Putin’s ability to wage destruction,” von der Leyen said.

“This will solidify the complete isolation of the Russian financial sector from the global system,” she said.

Sberbank did not immediately respond to a request for comment. The lender, which exited almost all its European markets in early March, has previously said that other rounds of sanctions would not have a significant impact on its operations.

Von der Leyen said more high-ranking Russian military officials would face EU asset freezes and travel bans, without giving names. “You are not getting away with this,” she said, referring to the Kremlin.

State-owned Russian broadcasters RTR-Planeta and R24 are among those proposed to be shut out of European airwaves, diplomats said, although von der Leyen did not give details in her address to parliament.

The EU’s chief executive also proposed a recovery plan for Ukraine once the conflict ends, saying there was a need for hundreds of billions of euros in funding to rebuild the country.

“Eventually, it will pave the way for Ukraine’s future inside the European Union,” von der Leyen said.


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OPEC+ needs pressure too. They are not increasing output to ease supply concerns, choosing instead to profit from the war.

It should be simple : many of these countries, governments and kingdoms live with the comfortable knowledge that the rest of the world will rescue them if attacked like with the Kuwait war.

That assumption needs to come with their cooperation in increasing output when needed. They act in concert as a cartel, which is illegal in many places. Time to put an import tax on OPEC oil?

Ukraine, like many countries in the Middle East, is simply another casualty of the Bretton Woods Agreement. The war in Ukraine is just another petrodollar war.

The “Nixon Shock” of 1971 removed the gold backing of the dollar. The US drastically needed to invent a reason for nations to hold dollars. They needed to manufacture a demand for dollars. The petrodollar system was born. This was a brilliant idea to replace gold with oil and to ensure the global dominance of the dollar as the global reserve currency.

“The 1973 oil crisis further fixed the value of the dollar as a result of this oil shock, bringing Saudi Arabia and the OPEC countries to make a secret agreement with Washington, the main architect being President Nixon’s legendary Secretary of State Mr. Henry Kissinger. This agreement provided that in exchange for Washington’s political and military protection, the OPEC countries would be required to sell oil only in dollars.

The petrodollar was thus born, being a replacement for the gold-linked standard that existed prior to Nixon. Once this system was supported by OPEC members, the global demand for US petrodollars hit an all-time high.

Petrodollars became the basis for America’s domination over the global financial system which resulted in other countries being forced to buy dollars in order to get oil on the international market.” –

AS part of their negotiations with OPEC members in the 70’s, American ambassadors made it clear that oil producers are free to fix the price at any level they wanted, but that it would be seen as a declaration of war if they did not sell their oil solely in terms of the dollar. Putin has shrunk his holdings of US Treasuries by 98% in 2020 and started selling commodities in terms of euro and yuan recently. This created an enormous problem for the USA because Russia and Ukraine are the largest commodity exporters in the world. Ukraine is a battleground between Russia and the USA, and the fight is about the supremacy of the dollar.

I honestly don’t get your petrodollar preoccupation?

Say I have Seychelles Rupee and need 1m barrels of oil. So I hunt around and find a contract for (non Urals oil) $105m for 15 July delivery. All good, I swap 1,400million rupees for dollars and settle my contract. How does a $ sign on the barrel of oil strengthen the dollar? It is simply a common denominator. If the seller wanted he could have priced his oil in wheat futures or tuna loins and I could have transacted too. The benefit of the dollar for long dated contracts is a very stable denominator with a very predictable cost of time factor due to low volatility. Heaven knows what tuna loins will be worth 15 July!

In my opinion oil could be priced in Renminbi tomorrow and nothing changes. Currency exchange volumes PER DAY day exceed the ANNUAL trade in goods by quite a margin. The currency price tag on a sticker counts for absolutely nothing.

I would really like to understand where you come from with this argument Sensei

The fact that a commodity is sold in terms of any specific currency creates a demand for that currency and as such, supports the value of that currency.

Let’s replace the dollar with cowrie shells. Companies in Saudi Arabia are willing to sell their oil to me, but they only accept cowrie shells from Central Africa as payment. Now I have to buy cowrie shells before I can buy oil. Whereas cowrie shells had no value before the Saudis made this decision, it has a lot of value all of a sudden, depending on the amount of oil the Saudis have for sale. The size of the oil market now determines the value of cowrie shells.

Cowrie Shells pay no interest. So, instead of buying the cowrie shells, I would rather buy Central African government bonds, priced in terms of cowrie shells that pay interest. When I purchase the oil, I merely transfer the cowrie shell bonds to the Saudis. This transaction provides a huge windfall to the Central African government which owns cowrie shells. Firstly, I support the value of their shells, and secondly, I lend money to the Central African government at interest rates determined by them! Where in the world does the borrower determine the interest rates? Thirdly, the CAR enjoys the exorbitant privilege of buying oil and commodities in terms of a shell they can breed and multiply without constraint!.

The Central African government has all of a sudden gained the power to live beyond its means because I am forced to lend money to them in direct proportion to my oil needs. They implement huge social welfare, and state construction projects that are financed by me, the international oil purchaser. They realize that the oil trade creates a huge market for cowrie shells and they start breeding shells on aquaculture farms. They call this venture the Cowrie Shell Reserve Bank Aquaculture Plant. They breed shells like crazy and they flood the market with cowrie shells. The Central African Republic is now the wealthiest nation on earth, based on GDP per Capita. Citizens see the CAR as the center of the universe and their president describes America as a sh+thole country.

The next day, the Saudis change their minds and they decide to only accept ostrich feathers as payment for oil. The cowrie shell currency explodes into hyperinflation because of the sheer amount of shells in circulation without any demand to support the value. Cowrie shell bonds lose 98% of their value and interest rates go through the roof, bankrupting the CAR government. The president of the CAR blames speculators and corrupt Western forces for the attack on the cowrie shell market.

South Africa becomes the wealthiest nation on earth because we have a monopoly on ostrich feathers.

In reference to your statement about the derivatives market for commodities or currencies, we should keep in mind that all derivative instruments are based on the underlying instruments whose value is determined in the spot market. Derivatives is a zero-sum game. There is a long position for every short position and at expiry of the contract there are zero open positions. Positions are netted off against each other and very few contracts result in physical delivery. One thousand tons of wheat can transact on the futures markets for every 100 tons of wheat that changes hands in the spot market.

The fact that there is a huge market for dollars does not imply that the relatively small market for commodities does not determine the value of those dollars. The currency market is an enormous derivatives pyramid that is built upon the underlying trade of physical products or services.

The daily forex market turnover exceeds annual world trade. Think about that fact – no conspiracy theories involved. There is no defensible argument for saying that pricing a small part of global trade in dollars creates demand for dollars.

The dollar is simply a highly liquid, relatively stable, global denominator with a narrow buy/sell spread.

Sorry, still disagree

When you buy cowrie shells you are NOT borrowing or lending anything. You are exchanging Seychelles Rupee for cowrie shells! I get their shells to give to the Saudis, they have my rupee.

The US is not hoarding cowrie shells which action boosts its value. They give out shells and receive all manner of currencies on oil transacting. This partly funds their rather immense trade deficit. That deficit is the supply of US bonds to the market, it has nothing to do with how much oil other nations buys.

The trade deficit is due to the Triffin Dilemma. Providing dollar reserves to nations who need those reserves, causes a ballooning trade deficit for the reserve currency nation. Why do these nations need dollar reserves? Why do they need dollar reserves if they can buy Saudi oil in rupees? Why would Putin and China make such a big deal of the fact that they are circumventing the dollar in international transactions and that they stopped buying US bonds? Why is this such a big deal for the USA? So much so that they are willing to let Ukraine go up in flames?

Let’s go further and ask – why would the USA make the effort to make this deal with Saudi Arabia, and why would they enforce this privilege so diligently for more than a decade if it does not mean anything? Why are they willing to send more than 4000 soldiers to their death in a “War on Terror” against oil-producing nations? Why do they spend billions on a program to destabilize the Donbas region? Why do they need to intimidate Putin with military installations on his border?

If your argument is correct, then the conflicts in the Middle East and Ukraine did not happen. No nation goes to war over emotional issues. They all go to war over monetary and financial issues.

End of comments.




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