Earlier this week, the EU could use a sixth package of sanctions against the Russian Federation, which includes an oil embargo. Experts estimate the impact of this decision differently.
Although the European Union has already imposed an unprecedented number of sanctions on Russia for the war against Ukraine, the economic impact of most of them will only be noticeable over time. Brussels believes it is almost impossible to quickly break the Russian Federation’s ability to finance the war without restrictions on oil and gas imports.
That is why the European Commission says they are working on including oil in the sixth package of sanctions. All we are talking about is oil right now, because it is easier for the European Union to replace it than gas. The question remains open whether the embargo will be complete, whether it will only affect certain categories of oil and oil products, or just one mode of transportation, be it tankers.
The main reason why the embargo has not yet been formally proposed is the lack of consensus. Because sanctions require unity, the European Commission does not want to make proposals that will fail.
So far, first of all, Germany and Hungary have not agreed to the embargo, saying that the sanctions should not harm Europe more than the Russian Federation. The German government wanted to leave oil from Russia, but they added that it was entirely possible only before the end of the year.
Russia’s income from oil is higher than gas
While Russia’s gas has always been getting more attention, oil is more important to Moscow’s revenues. According to Eurostat, last year the EU imported from the Russian Federation crude and oil products worth 71 billion euros, and gas – 18 billion euros. The numbers are changing, but in recent years, oil has given the Russian Federation more money in Europe than gas.
However, experts note that due to price changes, gas began to play a big role. “Russia’s revenues. – Ed.) From gas this year could approach revenues from oil,” said Christian Egenhofer, an energy expert at Brussels think tank CEPS.
Another Brussels -based think tank, Bruegel, estimates that the EU pays Russia $ 700 million per day for oil and gas products and $ 400 million for gas. “The important source of revenue for the Russian state is allowing the Kremlin to finance the war,” Bruegel director Guntram Wolff added.
All trade sanctions imposed so far only cover up to 19% of imports from the Russian Federation to the European Union. For comparison, the share of oil and gas in recent years is about 50-60% of all Russian imports to the EU.
Why it is easier to replace Russia’s oil than gas
Russia is the main supplier of fossil fuels to the EU. When it comes to gas, the share of the Russian Federation for many years exceeded 40% of all imports here, although it was reduced at the end of last year and at the beginning of this year. As for oil, Russia’s share is much lower – about 25%. But for the Russian Federation, the EU market is a key one – more than half of its oil exports go there.
Liquefied gas terminals and pipelines from other countries will make it possible to replace only partially more than a third of Russia’s gas this year. Russia’s oil is easier to replace – its transportation can only be a problem for some regions.
Like the EU, Russia will also face the transportation problem. It cannot physically supply Asia with all the gas it sells to the EU, Bruegel energy expert Simone Tagliapietra said in an interview with DW.
It is easier to find alternative buyers for oil, but even there, according to him, Russia will have difficulties – both because of inadequate infrastructure and because many consumers today do not want to deal with energy from Russia. Federation.
Another problem is the oil brand. After all, part of refineries in the EU is adapted to the Russian Urals, which are heavier and contain more sulfur than Brent or WTI.
London -based pricing agency Argus explained that oil from the North Sea and Iraq could be an alternative to the Urals, but warned that they would not be enough to completely cut off Russia’s supplies in the event of a of absolute embargo.
Therefore, Tagliapietra said that replacement alone is not enough to compensate for Russia’s energy loss.
“We have to work when asked. Now it is very important to reduce our oil and gas consumption, and each of us can play a role in it,” he stressed and called for lower heating temperatures in winter, use less air conditioners in the summer and use public transport instead of cars.
Right now, EU governments are too cautious to encourage their citizens to consume less, Tagliapietra says.
Russian oil is already being sold at a discount
After the start of the war in Ukraine, some consumers began to refuse Russian oil. Consequently, the Russian Federation has to give a discount on its “black gold”.
As a result, the gap between prices for European and Russian oil has continued to grow since the 20th of February. On April 22, Brent from the North Sea was trading at $ 107 per barrel and the Urals at $ 71.
If the EU imposes an embargo on Russia’s oil, then Egenhofer expects two short -term consequences: “Worldwide, the price of oil will increase, and at the same time, Russia’s discount will also increase. , it may not matter (for the income of Russia. – Ed.) “.
Whether a barrel of Russian oil will be more expensive or cheaper than it is today, the expert is not making a prediction.
The European Commission understands this. Its chairman, Ursula von der Leyen, called “Putin’s revenue reduction” the main purpose of the sanctions. He wants to avoid a situation where Russia in other markets gets more money for its oil than the EU.
“Therefore, we are developing smart mechanisms so that oil can also be included in the sanctions,” von der Leyen said in an interview with German newspaper Bild.
Alternatives to the total oil embargo from the Russian Federation
Experts cite two alternatives to the complete embargo. We are talking about the threshold of prices for Russian oil and gas, or the introduction of high duties on them. The first idea was actively defended by Italian Prime Minister Mario Draghi.
Tagliapietra believes that both ideas are better than a full embargo: “It will reduce the huge flow of money coming every day from the EU to Russia for oil and gas imports, while at the same time has minimized the economic impact on European countries. “
The expert ensures that the threshold or the duties do not conflict with current contracts. And if Putin decides in response to cut off oil or gas supplies, this will be his political decision, which he can make at any time, Tagliapietra added.
But Egenhofer is sure that in order to achieve full effect, it is not enough to simply pay less to Russia or impose an embargo only on oil or gas: “If the goal is to stop the war by removing Russia’s very important income, so the only answer is to stop buying gas and oil at the same time ”.
Source: Russian Service DW
News from Athletistic in the Telegram. Subscribe to our channel Athletistic
Source: korrespondent
