European Commission President von der Leyen said at the plenary session of the European Parliament on May 4 that after the ban on Russian coal imports, the next target of sanctions will be Rosneft. “It’s not easy because some member states rely heavily on Russian oil, but we just have to work on it.” She said the European Commission’s proposal to extend sanctions to Russia’s oil exports would be for all Russian oil, including by sea and pipeline transportation, covering a comprehensive import ban from crude oil to refined petroleum products.
Von der Leyen added that the EU will ensure an orderly and gradual restriction of Russian oil imports, work with partners to secure alternative supplies, and will contribute to the impact of this move on global markets. impact is minimized.
“We will phase out Russian crude oil imports within six months and Russian refined oil imports by the end of the year.” She said the goal of the move is to Aid Ukraine and put pressure on Russia while keeping the EU’s own economy strong. The proposed new round of sanctions against Russia also includes the exclusion of Russia’s largest bank, Sberbank, and two other large banks from the Society for Worldwide Interbank Financial Communication (SWIFT) system, and a ban on the news information products of the three Russian state media from being used in any way. The form landed and spread in the EU.
According to EU rules, the European Commission’s proposal requires the unanimous consent of the 27 member states to enter into force. EU member states began discussing the sixth round of sanctions against Russia on the 4th. However, according to Reuters, the meeting failed to reach an agreement on the sixth round of sanctions proposed by the European Commission, and EU envoys will meet again on Thursday. Hungary, Slovakia, Czech Republic and Bulgaria have expressed concerns over the oil embargo.
The European Union and Russia have long been closely linked in oil supply and demand. According to the International Energy Agency, Russia is the world’s third-largest oil producer after the United States and Saudi Arabia. Russia is also the largest oil exporter in the global market, with 7.8 million bpd of oil exports in December 2021, including 5 million bpd of crude oil and condensate, accounting for about 12% of global trade, and exports of petroleum products About 2.85 million barrels per day, accounting for about 15% of global refined oil trade. About 60% of Russia’s oil exports go to Europe.
The European Union is the world’s second largest oil importer and the largest buyer of Russian oil. According to European Commission data, in 2021, Russian crude oil will account for 27% of its total imports, followed by Norway (8%), Kazakhstan (8%) and the United States (5%).
S&P Global data show that on February 24, Russia and Ukraine clashedBefore the outbreak, Europe imported about 2.7 million barrels of crude oil and 1.5 million barrels of petroleum products (mostly diesel) per day from Russia. As the situation escalated, European refiners and independent traders launched “self-sanctions”, risk aversion intensified, and Russia’s Urals crude traded at a steep discount to Brent crude. On April 29, the price of Urals crude oil assessed by Platts was $71.48 per barrel, and the price of spot Brent crude oil was $106.13 per barrel. On February 23, Urals crude was at $90.72 a barrel and Brent was at $100.48 a barrel.
S&P Global Commodity Insights expects Russian crude oil and petroleum product exports to lose in coming months as more buyers shun Russian oil Nearly 3 million barrels per day.
So a total EU embargo on Russian oil will cut Russia’s revenue significantly. To make up for the losses, Russia must find new buyers for this part of the product. But for EU countries, the oil ban is also a double-edged sword.
OPEC representatives said in talks with EU officials last month that current and future sanctions on Russia could lead to one of the worst oil supply shocks in history, with the world There is no other capacity on the market to replace this supply, and it has signaled that OPEC will not increase production.
Belgium-based Bruegel, an economics research institute, previously analyzed that most crude oil imports in Europe go through ships rather than pipelines. Meaning, it would theoretically be easier to replace Russian oil than to replace Russian gas. However, there are three main bottlenecks that should be considered to displace Russian oil: Oil infrastructure within Europe is designed for east-to-west flow, and reverse flow means redeployment of crude oil and oil product routes, which is challenging; some European refineries are suitable for For Russian oil, if it is produced with crude oil of different quality, the refining efficiency will be reduced. Iraqi and Iranian crude oil is the closest to Russian crude oil; in addition to crude oil supply, the EU must also consider replacing the refining capacity of diesel, naphtha and fuel oil produced by Russia. To make up for the Russian diesel gap in the future, European refiners will have to increase capacity utilization to the highest level this century.
Coal and oil are more global and mobile energy products than natural gas, which relies heavily on infrastructure. Therefore, the EU completely bans the import of Russian Coal and oil are less painful than disrupting natural gas imports. However, stopping oil imports from Russia will expose Europe to higher oil prices, which will require Europe to buy Russian crude at higher prices in a global oil market where supply and demand are already tightly balanced., petroleum products and substitutes for coal.
The importance of the United States in Europe’s crude oil import landscape is rising. In April, U.S. producers exported nearly 50 million barrels of crude to European buyers from major terminals in Texas and Louisiana, according to ship-tracking data compiled by Bloomberg. That accounted for almost half of all exports from the Gulf Coast, a major U.S. export hub, overseas last month. The Russia-Ukraine crisis has shrunk European supplies, with the United States sending the most crude to Europe since an export ban was lifted six years ago, as buyers seek alternatives to Russian supplies.