Start Russia is having difficulties to pass oil even to the European Union, dependent on the Russian commodity

Russia is having difficulties to pass oil even to the European Union, dependent on the Russian commodity

May 11, 2022 6:43 pm to 18:43
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Russia, oil, European Union
Photo by MustangJoe / Source: Pixabay

The European Union (EU) is taking measures to stop the flow of oil from Russia

Russia, which has long imported oil to European Union countries, is currently having difficulties passing on that oil as the European Union is aiming to ban the import of the product for its members.
Before, the European Union was uncertain about the ban on imports of the commodity from Russia, but now its representatives are taking steps to stop the movement of oil from Russia and also refined products to most European Union member states. , as the war in Ukraine rages on.

Countries like the US and Canada have already banned Russian imports.

You U.S, Australia, Canada and the United Kingdom have already banned oil imports from Russia. Japan said it also wanted to ban the import after meeting with the G7 over the weekend.
In conjunction with the European Union embargo, countries that decided to ban Russian oil would put about half of the world's economy outside the bounds of the product coming from there.

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According to CNN, the Kremlin's tax revenues increased due to the general growth of the values used as a reference and triggeramid the war in Ukraine. But if Russia were to lose oil imports to EU countries, about half of the giant European country's oil exports would be a huge blow to the Kremlin, causing government revenue to decline while other sanctions. would charge an ever-increasing price.
The International Energy Agency and other analysts say the country will struggle to find enough new customers to fill the gap the European Union will leave by banning imports, they also predict that the country's production will decline dramatically. as a result of these prohibitions.

Europe's relevance to Russia

In January, the oil sector accounted for 45% of the Russian government's budget and Europe has been one of its main customers. In the year 2021, the EU received around a third of Russian oil imports, according to the IEA (International Energy Agency), and before the invasion of Ukraine, Europe imported around 3.4 million barrels of oil per year. day.
However, since late February these numbers have dropped slightly as European oil sellers largely avoid oil from Russia that is shipped to Europe by sea, facing hefty shipping costs and the problem to secure the necessary funding and insurance.
The EU imported approximately 3 million barrels of oil a day from Russia in April this year, according to Rystad Energy, but after more than two months of war, the European Union wants to go even further, its representatives are proposing a ban on Russia's oil imports in six months and cease imports of refined products by the end of this year 2022.
Meanwhile, countries like Germany are in the process of reducing their energy dependence on Russia, while others said they would not be ready to give up the country's products, such as Hungary, which says it would need a period of three to five years to no longer make use of the Russian commodity. Some non-coastal states, such as Slovakia and the Czech Republic, rely heavily on supplies that are delivered through pipelines.
Still, with countries not going to ditch Russian oil anytime soon, with the EU's plan to ban imports, Russia's economy would be threatened as the International Monetary Fund had already predicted it would shrink by 8.5% this year, entering a deep recession.

India intervenes, China lags behind

A ban on imports from a large consumer like Europe will be problematic. If oil prices rise as a result of the ban, Moscow could bring in more government revenue for oil taxes in the short term. However, this will depend on Russia's ability to direct the oil produced to other consumers, which will not be an easy task, as an important part of Russia's oil exports to Europe arrives through pipelines. That is, redirecting that oil to Asian markets will require expensive new infrastructure that would take years to put in place.

Meanwhile, offshore oil may attract more buyers. India, which uses about 5 million barrels of oil daily, has greatly increased its imports from Russia since the start of the war in Ukraine.
The great Russian crude oil of the Urals has its value established having the Brent as a reference, which before the Russian attack, it was traded at a discount of cents and now, the discount is US$ 35 a barrel of oil, which makes it very attractive to consumers who do not have import bans.

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