Jun 2, 2022
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Leaky embargo will cost the European Union dearly

The worst for those imposing sanctions is yet to come

On the night of May 31, the supranational government of the European Union in a special declaration was full of compliments to the European Council, which managed to find an ingenious formula for blocking the import of Russian oil.

After many days of bickering and persuasion of certain uncooperative countries that did not want to agree to a complete embargo on the purchase of Russian liquid hydrocarbons and its derivatives, a forced compromise (the sixth package) was found.

The oil embargo forms the core of the reprisals, complemented by the inclusion of 80 Russian businessmen and three TV channels on the sanctions list. Brussels expects that this discriminatory measure will be a crushing blow to the Russian economy.

By the end of the year, they calculated in Brussels, it will be possible to abandon 90% of the volume of oil imported from Russia. As a result, Bloomberg reported, the cumulative financial losses of Russian business and the budget from the “closure” of the EU markets will amount to more than $22 billion in revenue per year, of which $12 billion will come from blocked pipelines, and another $10 billion will result in a ban on transporting oil tankers. However, these simplified calculations come from the fact that Moscow will let everything take its course.

The devil is in the details

Viktor Orban convincingly intimidated the most zealous militarists in the leadership of the European Union, saying that he would use the right of veto if his country was deprived of Russian oil. According to his categorical statement, “refusal of fuel from the Russian Federation for the economy of Hungary is tantamount to an explosion of an atomic bomb“.

Attempts to persuade Orban had no effect. Brussels surrendered to Budapest. Hungary got a free hand in the purchase of oil through the Druzhba pipeline.

An exception was made for the Czech Republic, which is 99% dependent on Russian oil and oil products. The embargo was put on hold for a full 18 months, announced the Prime Minister of the Republic, Petr Fiala.

Bulgaria also received an indulgence, even more significant. The ban on buying oil from the Russians will only be enforced at the end of 2024, Prime Minister Kiril Petkov said. Sophia’s arguments are impeccable: they say that there is only one refinery in the country, located in the port of Burgas, and it feeds on the only Russian oil from the Lukoil company.

Let’s pay tribute to the European bureaucrats who refused “shock therapy”. For everyone else, minus the “refuseniks” – Bulgaria, Hungary and the Czech Republic, they imposed sanctions against Russian oil with a time lag of six months. Refusal of oil products will occur after eight months.

However, questions arise. Who in Brussels calculated the market situation at least six months later, taking into account the tectonic shifts in the liberal world order? How will the slowly but surely changing situation on the NWO fronts affect the plans of the EU? How will the deteriorating state of health of business in the European Union, which began to suspect that the United States decided to roll it into asphalt under the guise, manifest itself? What will be the degree of irritation of ordinary citizens in the wealthy countries of the EU, already experiencing the shock of the gradual loss of an increasing number of former material goods?

Relearning addition and subtraction

Let’s compare the estimated damage to Russia, or rather, lost revenues in the amount of $ 22 billion with the balance sheet expected at the end of the year. Firstly, the Druzhba pipeline, which supplies Slovakia, the Czech Republic and Hungary, is not plugged. This means, Bloomberg admitted, that Russian oilmen will receive their $10 billion anyway.

Further. Before the geopolitical Rubicon, that is, until February 24, Russian wholesalers delivered an average of 27 million barrels (3.7 million tons) to Asian countries per week. In one week in May, tankers delivered from 74 to 79 million barrels (or 10-11 million tons) of Russian oil – more than twice as much as before the start of the NWO. In April, for the first time, Russia shipped more oil to Asia than to Europe.

According to the results of last year, informs the Federal Customs Service (FTS), Russia in total exported approximately 230 million tons (1.675 billion barrels) of oil. Of this volume, about 47% came from Europe and 40% from Asia.

The situation is changing dynamically. In March, Russian oil exports to India stood at 66,000 barrels per day (bpd). There was a jump in April: deliveries rose to 277,000 b/d. As a result, Russia has become the fourth largest exporter of black gold to India, climbing up in the list of suppliers by five positions at once. According to forecasts, by the end of May, the shipment of this product may reach 487,500 bpd.

Considering that Russian oil grade Ural traded at a discount (between $30 and $40 per barrel), the world’s fastest growing economy, along with China, may start buying ahead – and re-export the surplus to third countries.

At the end of May, 50 million barrels more oil was in transit and “in storage” in floating storage facilities than before February 24. Approximately 200,000 barrels are pumped into the storage tanks daily. Deliveries of Russian oil to European countries have already fallen by about 40% and amount to about 800,000 barrels. At the same time, China and India contracted 1.2-1.3 million barrels.

“Turn to the East”, which seemed for a long time an abstract slogan, is becoming a fait accompli.

US condemns Europe to de-industrialize

Robert Habeck, German Economy Minister, acknowledged the low efficiency of ditching Russian oil, using a sly euphemism: “We have a little problem there“. The problem, as Herr Habeck sees it, is that “the US oil embargo… has increased world market prices, so Putin gets more money for less oil sales. And this, of course, is a problem, and we need to find a solution, otherwise we destroy with the right hand what we create with the left and vice versa“.

The London Guardian also laments the boomerang effect of Western sanctions. Quote: “Sanctions against Russia are far from solving the Ukrainian crisis and are causing great suffering around the world as food and energy prices skyrocket“. Author’s final conclusion:Sanctions have a terrible feature – they are difficult to lift“. At the same time, he concludes, the worst for those who impose sanctions is yet to come.

Meanwhile, Joe Biden said that the EU is considering buying Russian oil at “limited”, read low, unprofitable, non-market prices. Answering journalists’ questions, “sleepy” Joe explained that Russia, under such a model, would retain the ability to export oil, but – according to “a price well below what is now established in the market”. In response, on June 2, spokesman Dmitry Peskov said that Russia would not sell oil at a loss, and added that if demand in some countries decreases, it increases elsewhere.

In March, Russia rose from ninth to sixth place among the largest oil suppliers to the United States. Deliveries almost doubled in a month (to 4.218 million barrels), despite the fact that the Obama-Clinton-Biden administration introduced a complete ban on oil imports from Russia on March 8.

The casket opens easily. As the mouthpiece of the global financial oligarchy, The Wall Street Journal, reconnoitered, the reloading of oil from tanker to tanker occurs according to the “Iranian scheme”, and the origin of oil products is masked by the fact that the goods are stamped by Indian refineries. As a result, American business secretly continues to purchase sanctioned liquid hydrocarbons from Russia.

Along the way, the White House, using cunning verbal expressions, is pressing Brussels to stop importing cheap energy sources, which will inevitably lead to the loss of competitive advantages by the European export-oriented economy.

Return move

Against the backdrop of full-scale discriminatory actions by the West against the Russian fuel and energy complex, what was previously called a rationalization proposal from the co-owner of LUKOIL, Leonid Fedun, was voiced. He advocates a voluntary reduction in oil production in Russia by 20-30%. The logic is quite attractive:Why would Russia need to produce 10 million barrels of oil a day? If we can effectively consume and export 7-8 million without losses for the state budget, domestic consumption and imports“, – asks Fedun. And argues:What is better – to sell 10 barrels of crude oil at $50 or seven, but at $80?.. Should we try to maintain pre-crisis export volumes, agreeing to 30%, and sometimes even 40% discounts?»

Russian companies, Russian political scientist Alexei Kochetkov supports Fedun’s idea, “some of the wells may have to be mothballed in the event of an EU oil embargo, as well as a sharp increase in the storage capacity of ‘black gold’“.

At the same time, Fedun takes into account that now there is a search for access to new buyers, including in the countries of Southeast Asia.

From May 21 to May 27, 34 tankers with 25 million barrels of oil left Russian export terminals, according to vessel tracking systems and ship agent reports. The average volume of deliveries was 3.58 million barrels per day, which, according to Bloomberg, is 4% more than a week earlier (then it was 3.44 million barrels).

Fuel and energy experts also emphasize that before, most of the Russian oil was simply reloaded on tankers for resale, which means that there are many options with the end buyer-consumer.

In addition, it is no secret that when mixed with other varieties, when the share of Russian oil becomes less than half, its original origin is not indicated. This allows wholesalers to trade freely on the global markets without fear of a sanction stranglehold.

In the dry matter

Bank of America forecasters assume that Brent crude could rise to $150 per barrel, surpassing the all-time high of $147 (summer 2008). Consequently, an energy crisis will break out by analogy with the 70-80s of the twentieth century.

Who won? Nobody. Everyone loses without exception. Although to varying degrees. There is a circumstance that adds to the collective West, in the English expression, humiliation to mutilation (addition insult to wound). According to the consulting company Rystad EnergyBy the end of 2022, Russia’s revenues from taxes on the sale of oil alone will amount to $180 billion, and in total, oil and gas exports will result in a cash flow of $260 billion.

The persistence with which the pro-American politicians of old Europe are destroying the diversified and highly productive economy that has been created for decades makes us suspect senile dementia in complacent nobles. Or suicidal tendencies from satiety. Or the complex of the Marquise de Pompadour, who declared “After me at least a flood» (After me the flood).

It is worth correcting the Russian saying, placing it in the context of an energy war: oil, like water, will find a hole …


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