Almost a year after the Russian attack on Ukraine, further EU sanctions against Moscow will come into effect on Sunday. Since the beginning of December, no Russian crude oil has been allowed to be imported into the EU by tanker, and since the beginning of January Germany has stopped importing oil via the Druzhba pipeline. From February 5, the EU no longer wants to buy any more refinery products such as diesel, petrol or lubricants from Russia. This should make it more difficult for President Vladimir Putin to finance his war of aggression. But consequences for Germany are also to be expected.
Will diesel and co. become scarce if nothing more comes from Russia?
“The general security of supply and the security of the supply of fuel is guaranteed,” assures a spokesman for Economics Minister Robert Habeck (Greens). The mineral oil association Fuels and Energy also sees no supply gap. It’s all about diesel. Around 12.5 percent of its consumption According to the industry association, Germany covered from Russia in 2022 – despite the Ukraine war. Replacements come from the USA, Western Europe and the Arab region, says Fuels and Energy. Petrol is not imported from Russia. For emergencies, there is a fuel reserve for 90 days.
Is diesel getting more expensive at the pump?
That’s not out of the question. Although the Düsseldorf energy expert Jens Südekum says: “I do not think that we will see dramatic price jumps.” The next embargo level has been announced for a long time. “In the past few weeks and months we have seen veritable panic buying at the important ports of Rotterdam, Antwerp and Amsterdam,” reports the economist. That will limit price increases.”
However, Thomas Puls from the German Economic Institute points out that diesel is scarce on the world market. If the EU no longer buys from Russia, the fuel will have to come from more distant areas, such as Saudi Arabia. The capacity of the special ships is limited, the distances are longer and the transports are therefore more expensive.
Why are diesel prices higher in East Germany?
Two effects come together when it comes to supplying East Germany: the new embargo level and the fact that the refineries in Schwedt and Leuna are not working at full capacity. This is because they have long been sourcing Russian crude oil from the Druzhba pipeline and have needed new sources of supply since the German import ban from January. The PCK refinery in Schwedt was recently only 55 percent full with deliveries via Rostock. She is hoping for additional volumes via Poland and Kazakhstan.
The lower production of the two east German refineries is noticeable regionally, explains Fuels and Energy. The gas station price in the east is therefore around 2.5 cents for petrol and around 1 cent for diesel per liter higher than the national average.
How many petroleum products did the EU recently import from Russia?
In October 2022, according to the latest figures from the EU statistics office Eurostat, Russia exported oil products such as diesel worth more than 2.3 billion euros to the EU. At that time, products worth around 558 million euros went to Germany alone.
Russian energy expert Alexej Belogoriev doubts that the EU can simply replace this supplier. So far, Russia has delivered 600,000 barrels a day to diesel alone; the USA, Saudi Arabia and India together would have 200,000 barrels. Even so, experts expect the sanctions will depress Russian production of petroleum products by 15 percent to around 230 million tons this year. A barrel equals 159 liters.
Is the EU embargo complied with?
According to research by The Economist, Russia has found ways to circumvent the oil embargo. According to this, a gray market is developing with its own shipping and insurance capacities, partly based on guarantees from the Russian state. Putin defended himself against the international price cap for crude oil with the Order to stop shipping to countries that comply with it from February 1st.
Economist Südekum sees new loopholes in the new level of embargo: “One main effect of the embargo will be that Russian diesel will no longer reach the EU directly, but will do so indirectly. Russia delivers to nations like India or Saudi Arabia, who buy the cheap oil, process it in their refineries and then sell us the diesel.” That is not the point of the embargo. But even if it were possible to prevent this circumvention, “then it would be the question of diesel prices in Europe is also certainly more critical”. In other words, these imports prevent even greater shortages in the EU.
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