War in Ukraine: Europe activates the Russian oil embargo and tries to suffocate Moscow’s economic resources

One of the European economic sanctions that can do the most damage to Russia went into effect on Monday. Right away it is forbidden to buy Russian oil transported by sea. Which is the vast majority and an understatement for not saying that Hungary is allowed to continue buying what comes to it via pipelines as long as Ukraine doesn’t get tired and close the tap.

The ban on buying Russian crude oil, which will be extended to all oil derivatives in March (especially diesel, of which Russia was the first European supplier), seeks to reduce Moscow’s revenue to make it difficult for financing his military aggression in Ukraine.

The preparation and announcement of this sanction, made before the summer, has already hit Moscow and the Russian government proves it it won’t find buyers easily to replace the European ones no matter how much you lower the price.

Russian oil exports fell from February to October 40%. Those of petroleum derivatives between 20% and 25%. Moscow is resisting for now because rising prices of energy products compensates for the reduction in exports, but oil prices are returning to normal and the Russians are losing billions of income.

The sanction was seen for a time in Brussels as counterproductive because it could make imports of oil and derivatives more expensive, drive up energy prices and have an inflationary effect at the worst time, when inflation hit its eurozone record in four decades in October.

But European governments and companies seem to have done their homework, from January to October almost halved Russian crude imports just over 1.4 million barrels a day (0.3 of which goes to Hungary via pipeline).

The reduction was offset by the increase imports from other suppliers from the Middle East, West Africa, Norway, Brazil and Guyana, according to data from the International Energy Agency (IEA) cited by Reuters in mid-November.

The countries that most had to redirect their oil purchases to other suppliers were Germany, the Netherlands and Poland, which before the war They bought most of their oil in Russia..

In total, 29% of the oil imported by the European Union up to January was Russian. Although pre-war dependency varied widely. If Lithuania obtained 83% of the oil it needed to export from Russia, Finland 80% and Slovenia 74%, for Austria it was just 3%, for Ireland 6% and for Sweden 9%.

The end of the purchase of petroleum products, especially diesel, has been postponed to March because it’s harder to find alternative suppliers.

Although governments have been preparing for this cut for months, EU sources warned when the March date was announced that there could be tension in the market if the promised new refineries are not operational in the first quarter of the year.

These tensions in the diesel market can give rise to a phenomenon which it would allow Russia to cut its losses. If Europe can’t refine everything needed to make diesel, countries like Turkey could increase its imports of Russian crude to later refine it and sell it as diesel in European markets. Russia would lose revenue, but not as much as expected.

The cap of 60 euros

Added to the embargo is the ceiling on the price of oil approved by the European Union and the G7, which means that It also applies to the United States, Japan and Canada.

The signatories of the agreement they will not buy Russian oil at more than 60 euros a barrel. They are joined by other major importers, such as Australia. Moscow threatened no more selling oil to countries applying this cap.

His problem is that it will be difficult to find alternative buyers for so much crude oil. Another way to reduce your income. Because with a ceiling of $60, Moscow will continue to get revenue from the sale of crude oil, but less than expected.

Brussels, special for Clarin

ap​