May 1, 2022
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Sixth package of sanctions: is the EU going to live without Russian oil?

Sixth package of sanctions: is the EU going to live without Russian oil?

Photo: DPA/Global Look Press

Russia will have to face restrictions on oil supplies to the European Union. The New York Times, citing its sources, reports that as early as next week the EU will introduce a new – sixth – package of sanctions, which involves a phase-out of “black gold” from Russia.

It is assumed that technically the embargo will be introduced within a few months. It is interesting that the decision is planned to be made at the level of the meeting of the ambassadors of states, so as not to engage, as the newspaper writes, in the “labor-intensive process of gathering heads of state.”

At the same time, the publication does not hide the fact that the oil embargo is aimed not just at the so-called “energy independence” from Russia, which has been talked about in the Old World and across the Atlantic for several years. No, the main goal of the embargo is to try to finish off Moscow economically. “Western support for Ukraine intensified on Friday as the European Union was poised to approve an embargo on Russian oil amid fresh assessments that the Russian military’s eastern offensive is being slowed down by logistical issues and stiff Ukrainian resistance,” the NYT writes in no uncertain terms.

Further, the newspaper describes in detail the course of events in the Ukrainian crisis. With a listing of intelligence data, the number of Russian battalions participating in the special operation, the number and types of weapons available to the Russian side. That is, talking about purely military science. At the same time, the idea is being consistently promoted that the Russian Federation should simply be squeezed. And the oil embargo, according to the authors of the article, can be such a tool.

At the same time, the economic interests of European states remain outside the considerations of American authors. The United States only proposes to consider ways of alternative supplies. Like, Germany can receive oil through the Gdansk terminals, which are yet to be built. And Berlin’s fears are only briefly mentioned that in response to the refusal to buy Russian oil, Germany may also lose gas from Russia. And the German employers’ association has already said that the rejection of Russian gas will almost completely stop the country’s economy.

On the other hand, today’s realities are such that the world thinks less about money than about politics. The Bloomberg agency described even sophisticated scenarios for the EU’s behavior. In addition to the embargo, mechanisms such as setting a price limit and creating tools to retain revenue are also envisaged. Simply put, Europe is thinking about buying raw materials from Russia either for free or not paying at all. And it’s also presented as a big favor.

One way or another, Germany and France, Europe’s largest buyers, are now seriously considering abandoning Russian oil, according to sources from American publications. According to experts, the EU will be able to completely abandon Russian fuel by 2027.

This is despite the fact that today there are practically no alternatives to Russian supplies. Prior to the start of the special operation in Ukraine, Russia was shipping 2.5 million barrels of crude oil per day to Europe. Another 3 million barrels are oil products, mainly diesel and fuel oil. For example, the dependence of Eastern European countries on Russian supplies is estimated at 80-90%. Consumers in East Germany are completely dependent on the Druzhba oil pipeline, as they are located at a considerable distance from seaports.

According to Leading Analyst of the National Energy Security Fund Igor YushkovRussia will be able to overcome the pressure:

The embargo will be introduced one way or another. The question is how quickly the Europeans will be able to agree on a solution. A week ago, they thought about it and were determined, but in the end they did not impose an embargo. So far, the decision has been postponed until the end of May, before the summit of the EU heads.

De facto, the European Union considers it necessary to put pressure on Russia because of the conflict in Ukraine. But apart from the oil embargo, there is nothing significant left that could infringe on the interests of the Russian Federation. The latest step is the gas embargo.

Therefore, everyone is talking about the sixth package of sanctions, but so far we have not seen it. New disconnections of Russian banks from SWIFT are possible. The oil embargo should also be included there.

Recently we have seen an interesting situation. First, a political decision is made, and then they begin to put pressure on European companies with a demand to abandon Russian coal or oil.

“SP”: – Will the embargo hit the Russian economy hard?

Russia, when faced with the problem of selling its products in Europe, begins to go to Asian markets. For example, Russian coal is currently traded more in India, Southeast Asia, and China.

At the same time, Russia begins to oust other manufacturers from Asian markets, for example, from the Middle East: Saudi Arabia, the United Arab Emirates, Iraq. And these Middle Eastern producers are eventually moving to European markets. It turns out that Russia is changing markets with the countries of the Middle East.

Europe is looking at this process and, based on the rate of market exchange, is calculating when the EU will cease to depend on Russian hydrocarbons. This process has already been demonstrated in the purchase of coal. And then sanctions are introduced with a ban on buying from the Russian Federation precisely by that very period when the market exchange ends.

Here coal was forbidden to buy by August 10th. That is, the Europeans figured that if the exchange of markets takes place at the same pace, then by the designated date it will be possible to abandon Russian coal. And the same thing happens with oil. First, they consider when Russia will be able to leave, and then they name the terms and impose sanctions.

But oil is somewhat more complicated. There are long term contracts. And it is necessary not only to find other oil, but raw materials of similar varieties. Therefore, the rebuilding is more difficult and slower. There are also problems with logistics, how to deliver oil from sea terminals to consumers by land.

“SP”: – Germany said it was ready for such a step. But earlier she feared that due to the oil embargo, Russian gas supplies could be lost, which is very significant. Could the position have changed? What is Germany counting on?

For the FRG, the question of nationalization also arises. Russian companies own some refineries, one of which has a controlling stake in Rosneft. Rosneft has a minority stake in several refineries. The Russian Federation may, in response to the embargo, stop its factories. Therefore, Germany adopted a law on the actual nationalization of Russian assets. Like, if refineries refuse to process other oil, then the plants will be taken away.

It is clear that Germany does not want to take such steps, as they would set a bad precedent. On the one hand, in Europe they talk about the right to property, but in practice it turns out that this right is not respected in any way.

“SP”: – What retaliatory steps can Russia take?

– If Russia considers the consequences of the oil embargo fatal, then gas supplies may be cut off in response. Precisely in order to cause serious damage to the economies of European countries.

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