The Russia-Ukraine war: the embargo on Russian oil will force the European Union to look for other suppliers

The partial embargo of the European Union on Russian oil imports it will force European countries to seek other sources of supplywhich could cause a price increase.

Russia produces around 11 million barrels a day of crude oil, of which exports just over 5 million.

China is the largest importer of Russian crude oil, according to the International Energy Agency (IEA), but Europe as a whole surpasses it. with 2.4 million barrels per day last year.

Russia also exports 1.5 million barrels a day of diesel, on which Europe depends heavily.

Gas, more complicated

However, Europe is much less dependent on oil than on Russian gas and it’s much easier find alternative cargoes by ship.

The 27 member states of the EU have decided to phase out imports of Russian oil transported by ship, which it represents two thirds of European purchases.

A temporary exception is foreseen for oil arriving through pipelines, in a concession to circumvent Hungary’s veto, but Germany and Poland had already given up on importing via this route.

Total, 90% of Russian oil imports will be stopped by the end of the year, according to EU leaders.

“We will have to find new suppliers for about 3 million barrels per day over the next few months, “said Commerzbank analyst Carsten Fritsch.

“The EU appears to be more interested in West African supplier countries,” the expert noted, citing Nigeria, Angola and Cameroon.

“There are already alternatives, which they are essentially the Middle East and North America for crude oil, “Olivier Gantois, president of the entrepreneurial association Ufip Energies et Mobilités, told AFP.

Commerzbank also cites contracts to import large quantities of oil from the UAE in July.

In addition to crude oil, Europe will have to find alternative fuel sources, not produced in sufficient quantity.

look at it in asia

Ofip cites in this regard “India, which is a large producer”.

The French group TotalEnergies also indicated that it would mobilize “petroleum products from other continents“.

In the medium term, the EU also wants to reduce its dependence on fossil fuels by accelerating the development of renewable energies.

The price of oil, already high in recent months, it rose to its highest levels on Tuesday two months after the EU decision, which, however, had been brought forward.

Experts believe that the Russian barrels simply it will be redistributed at low prices in Asia in a game of “communicating ships” to release more oil shipments to Europe.

Helima Croft, an analyst at RBC Capital Markets, believes Western officials are making room for this Asian “valve” to prevent a price hike.

“This strategy appears to be based on the assumption that Asian importers, particularly India, will continue to ask for even higher discounts accept Russian products, “he says.

To avoid a politically sensitive price increase, Western powers can still free up some of their strategic oil reserves.

Above all, they expect OPEC agree to pump more crude in the coming months to supply the market.

However, this is unlikely to happen as the cartel, allied with Russia, is benefiting from the high prices.

AFP agency

PB