The EU’s difficulties in giving up Russian oil
L’European Union still took time to impose the embargo on Petroleum Russian. The measure was instead adopted (on March 8) without too many hesitations from United States And Great Britain a few days after the Russian invasion of Ukraine. One reason for this discrepancy is in the numbers. According to theAie (International Energy Agency) la Russiathe world’s largest crude oil exporter, was selling nearly 8 million barrels a day to global markets at the end of 2021.
Of these, 60% come in Europe, 8% in the US and GB. According to BP data, Russian exports of crude oil and petroleum products to Europe represent the second largest bilateral flow of Petroleum in the world, only behind the one in between United States And Canada. In Statistical review of world energyBP’s annual report, in 2019, the last year before the pandemic, Russia had supplied 29% of Europe’s crude oil imports and 51% of the continent’s petroleum products.
London, while adhering to the US embargo, immediately said that the stop of supplies will be gradual and will take place by the end of the year. The import of hydrocarbons (oil + gas) Russian for Washington it is worth about 8% (crude oil 3%) equal to 700,000 barrels per day. Imposing an immediate embargo “overnight would plunge our country and the whole of Europe into a recession,” German Chancellor Olaf Scholz said recently. And just as the German chancellor was speaking, the Russian vice-premier, Alexander Novak, explained that with the European embargo, prices could reach 300 dollars a barrel.
BUY CRUDE OIL IN THE MIDDLE EAST
In the short term, therefore, the replacement of Russian crude oil becomes extremely difficult. This week, following the rumors, the prices have risen by another 10% with the Brent, the global benchmark index, which touched $ 120 a barrel at the end of trading. Supporters of the embargo believe it is possible to lift the Petroleum Russian arriving in Europe redirecting international flows, thus also reducing any jump in prices. According to this thesis, ‘sanctioned’ Russian crude oil would be redirected to China And India, freeing the Middle Eastern one that would be delivered to refineries in Europe. As for derived products, Russian fuel oil and distillates could be sent to South America, Africa and Asia, while Europe could use non-‘banned’ products from the United States, China, India and the Middle East.
However, many analysts note, there would be many obstacles to carry out this plan. First of all, transport costs for producers and consumers would increase, with supply routes becoming much longer, increasing the demand for tankers, which are more expensive than shipping crude oil through an oil pipeline. Other critical issues‘: the refineries are set up to process certain types of crude oil. Changing the Russian one and the Middle Eastern one would reduce efficiency, increasing costs and consequently prices. The redirection of flows, explains analyst John Kemp in an article, would interrupt consolidated commercial relations. Middle Eastern sellers have invested time in building long-term relationships with refineries in China, India and the rest of Asia.
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