Its oil exports – POLITICO

Press play to listen to this article

Pressure is mounting on the EU to block the flow of Russian crude oil – a major foreign exchange earner for the Kremlin and an energy source easier for the EU to refuse than natural gas.

“It is inevitable that we will talk about the energy sector and we can definitely talk about oil because it represents the biggest revenue for Russia’s budget,” Lithuanian Foreign Minister Gabrielius Landsbergis said on Monday, addressing a meeting of EU foreign ministers in Lithuania Brussels came.

This idea is backed by a growing number of other EU countries as the bloc considers a fifth round of sanctions against Russia over its invasion of Ukraine.

“We will continue to talk about what kind of sanctions we can think of again, especially in the energy sector,” said EU foreign policy chief Josep Borrell. The issue will be raised when EU leaders meet for a joint summit later this week with US President Joe Biden – who has already imposed an embargo on all Russian energy imports.

It leads to nervous noises from Moscow.

“As far as we know, they are actively discussing imposing an embargo on the supply of [Russian] Oil”, Kremlin spokesman Dmitry Peskov called on Monday, adding that such a move means Europeans “are going to have a hard time”.

Deputy Prime Minister Alexander Novak told The Russian Duma said that given the West’s preparations for a ban on Russian oil purchases, it is increasingly urgent for Russia to increase supplies to Asia.

The problem for Moscow is that it is much more vulnerable to a crude oil consumption freeze than natural gas sanctions.

The EU gets about a quarter of its gas from Russia – most of it is transported via pipelines, making quick replacement difficult.

But crude oil is a different story. Although the EU gets about a third of its oil from Russia, only 4 to 8 percent comes by pipeline – meaning it can more easily be replaced by buying oil on international markets. It’s also a much more painful blow to Russia, as it earns far more from selling oil than it does from gas.

Dependence on Russian crude varies widely; France gets about 13 percent of its oil from Russia, Germany about a third, Poland and Finland two-thirds and Slovakia three-quarters, according to an analysis by the NGO Transport & Environment.

“The key is to cut off funding for the Russian war machine. The sanctions imposed by the West so far have not affected Russia’s attitude in any way,” said Piotr Arak, head of the Polish Economic Institute.

Dirty raw material

The invasion of Ukraine is already making Russian oil a pariah commodity; Russia’s flagship Urals crude is now trading near $30 discount the global oil benchmark and is struggling to find buyers despite a surge in sales in markets like India and China.

“Russian Sea Crude Oil Exports up in March MoM,” called Petro-Logistics, an analytics firm that tracks oil tankers, added: “Following Western sanctions against Moscow, some cargoes are awaiting destination.”

The International Energy Agency warns that Moscow could respond to sanctions pressure by cutting production – although that would also shut off the roughly €250 million a day cash flow flowing from the EU to Russia – which Ukraine says is helping to finance the war .

Starting next month, Russia could cut oil production by as much as 3 million barrels a day, the IEA warned on Friday — about a third of its crude exports.

“With the potential loss of large volumes of Russian supplies looming, there is a real risk that markets will tighten further and oil prices will escalate significantly in the coming months as the world enters the peak demand season in July and August,” the IEA said on Friday report.

“Losses could increase if restrictions or public condemnation escalate,” the IEA added in a separate oil market analysis.

It’s already happening: Over the weekend, the world’s three largest oilfield service providers began cutting ties with Russia, and without them, Russia will struggle to maintain volumes.

Friday’s IEA report lists 10 recommendations – including lowering speed limits, favoring trains over planes and encouraging home working – to reduce oil demand and give governments time to seek replacements from other oil-producing countries Find.

Taken together, they could save the equivalent of 2.7 million barrels of oil by summer if fully implemented by the IEA’s 31 members, most of whom are EU countries. The agency will gather Energy and climate ministers from around the world on Wednesday and Thursday to coordinate their response.

search for oil

IEA members have already agreed release Released 63 million barrels of emergency oil supplies “to send a unified and strong message to global oil markets that there will be no supply shortages as a result of the Russian invasion of Ukraine.”

But that’s only a temporary buffer – and oil stocks in OECD countries are at an eight-year low, the IEA has warned. The EU requires countries to hold petroleum products in stock for 90 days, so there is still time to plan.

Analysts have been investigating since the invasion of Ukraine began alternative Oil wells to replace the Ural crude to be processed in European refineries. Ural is a “medium acid” crude oil with sulfur content that makes refining more difficult and costly.

Many solutions lie in turning to regimes whose human rights records are as fragmented as Russia’s.

Alain Mathuren, communications director at FuelsEurope, the association of European petroleum refiners, said Arabian light crude from Saudi Arabia is often a suitable substitute for Urals when it’s available – although many EU refiners can quickly adapt to other types.

But during “Saudi Arabia and the [United Arab Emirates] have significant spare capacity that could immediately help plug a Russian deficit,” the IEA said in its monthly market report, the pair “so far showing no willingness to tap into their reserves.”

If the US lifts its embargo on Iran, it will have “approximately 60 million barrels in floating storage that could immediately hit the market pending a sanctions deal.” called Andy Critchlow of S&P Global Commodity Insights.

As an added bonus, Critchlow added, “Iranian light crude is effectively an equivalent swap for Russia’s Urals.”

US oil major Chevron is seek permission to ramp up production in Venezuela, the US authorities should lift a ban that has been in place since 2019.

But overall, the big global producers are reluctant to ramp up production.

At a meeting of OPEC and its oil-producing allies – including Russia – on March 2 I Agree to a modest overall increase of 400,000 barrels a day in April, but denied there was a global supply shortage.

IEA director Fatih Birol called this assessment disappointing.

“I really hope that at the next meeting on March 31, they will come up with some messages to relieve the oil markets,” Birol said.

Jacopo Barigazzi and Zosia Wanat contributed to the coverage.

This article is part of POLITICO Pro


The one-stop-shop solution for political professionals that combines the depth of POLITICO journalism with the power of technology


Exclusive groundbreaking news and insights


Custom policy intelligence platform


A high-level public affairs network

blank Its oil exports – POLITICO

Fry Electronics Team

Fry is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Related Articles

Back to top button