Brussels could shelve its plans for an embargo on Russia oil imports amid mounting tensions over the bloc’s attempts to roll out a sixth package of economic sanctions against Moscow.
Hungary has refused to back further measures against Russia’s energy sector, which has prevented the bloc from targeting more oligarchs and banks to ramp up pressure on the Kremlin over its invasion of Ukraine.
Diplomatic sources told the Telegraph that the European Commission is considering carving out the proposed ban on Russian oil in order to overcome the opposition from Budapest for the wider package of sanctions.
But hawkish member states have now warned they will veto the package if eurocrats offer to water down the sanctions further.
“We will not agree to further weaken sanctions, or to make unjustifiably payments for sanctions blockers,” an EU ambassador said.
“We are under political and moral pressure to impose sanctions against Russia, as this is the only way to effectively stop Putin’s war machine.”
Hungary is seen as the final hold-out in the bloc’s bid to ban imports of Russian oil by the end of the year.
Under the commission’s plans, EU countries would phase out supplies of crude oil within six months, and refined products by the end of the year.
After significant protests, landlocked Hungary and Slovakia, which are reliant on deliveries from Russia via pipelines, were offered until the end of 2024 to make the transition, while the Czech Republic was given until June that year to comply.
Another possible concession being explored would see Budapest handed hundreds of millions of euros from the bloc's budget in order to accelerate the transition away from Russian oil.
Brussels keen on a quick fix
Brussels was said to be keen to find a quick fix to their opposition in order to hit a number of Vladimir Putin's close associates, rather than leave them unpunished for the war while the row over oil is resolved.
Officials have proposed hitting Alina Kabaeva, a former gymnast and alleged former girlfriend of the Russian president, as part of the package.
Ursula von der Leyen, the Commission's president, said the bloc would also move to cut off Sberbank, Russia's largest bank, from the Swift international payments sections.
But without an agreement between EU member states on the oil blockade, these proposed sanctions remain off the table.
"It does not make sense," an EU diplomat told the Telegraph, commenting on Hungary's opposition to the fossil fuel ban.
In Brussels, there is a growing consensus that EU leaders will have to step in to reach an agreement on the oil element of the sixth sanctions package.
Viktor Orban, the Hungarian prime minister, has previously signalled the issue would have to be dealt with at a European Council summit.
They next meet in the Belgian capital at the end of the month.
Meanwhile Britain unveiled its next wave of sanctions on Mr Putin's "wallet" of family and friends, according to Liz Truss, the Foreign Secretary.
Ms Kabaeva, who is also part of the EU's plans, was hit with an asset freeze and travel ban by the British Government.
A number of the Russian president's cousins and his former wife were also targeted.
Ms Truss said: "We are exposing and targeting the shady network propping up Putin's luxury lifestyle and tightening the vice on his inner circle. We will keep going with sanctions on all those aiding and abetting Putin's aggression until Ukraine prevails."
"Putin's lavish lifestyle has regularly been on display, with reports exposing links to a £566 million yacht and the $1 billion 'Putin's Palace' - officially owned by close associate, Arkady Rotenberg, who was sanctioned in December 2020."