RFrom Monday, crude oil from Russia may only be imported into the European Union in exceptional cases. The import restrictions are based on a list of sanctions passed by the 27 member states in June over Russia’s war of aggression against Ukraine. It went into effect shortly after the resolution, but stipulated transitional periods for the oil embargo.
Also in effect on Monday, a regulation aims to force Russia to sell oil to buyers in other countries at a maximum of $60 per barrel. Then the price of about 57 euros per 159 liters will rise to 9 euros below the last market price of Russian Urals crude oil.
Both measures are intended to help limit Russia’s commercial gains and thus also limit Russia’s war capabilities.
An exception for Germany
According to an EU official, about three million barrels of crude oil per day are affected by the ban. At a long-term average price of $70 (67 euros) per barrel, Russia would lose about $210 million (200 million euros) in revenue per day. It is considered impossible to sell the entire volume of oil to other customers.
Germany wants to stop buying Russian crude oil by the end of the year at the latest. Until then, it will benefit from the exemption that applies to EU countries that, due to their geographical location, were particularly dependent on oil via pipelines from Russia and could not replace imports so quickly. In the Federal Republic of Germany, the PCK refinery in Schwedt in Brandenburg is particularly benefiting from this. So far it has been supplied with Russian oil from the Druzhba pipeline, which must now be replaced.
Pumping station at the PCK Schwedt refinery in Mecklenburg-Vorpommern: Russian oil still gets here
Source: dpa / Bernd Wüstneck
So far, without a time limit, the countries of Hungary, the Czech Republic and Slovakia want to take advantage of the exemption. Other exceptions are for Bulgaria with regard to the import of seaborne Russian crude oil and for Croatia with regard to vacuum gas oil. A ban on petroleum products will apply to all other products from February 5, 2023.
In order to impose a price cap on Russian oil exports to countries outside the European Union, it was determined that essential services for Russian oil exports in the future can only be provided with impunity if the price of exported oil does not exceed the price ceiling.
Western shipping companies can use their ships to continue transporting Russian oil to countries such as India, China and Egypt. The regulation also applies to other important services such as insurance, technical assistance, financing and brokerage services.
The hope is that the price cap will ease tensions in energy markets and also relax third world countries. In addition, it also aims to ensure that Russia cannot benefit from higher oil prices and thus fill the war chest. Kremlin spokesman Dmitry Peskov said in Moscow on Monday that the measure would not affect military action against Ukraine. „Russia and the Russian economy have the capabilities to fully meet the needs and requirements of the special military operation,” Peskov told reporters.
And according to the International Energy Agency, revenues from oil and gas sales accounted for up to 45% of the Russian state budget last year. According to EU officials, oil accounted for about 37 percent of total export earnings, which benefits the country’s budget.
Meanwhile, Russia has threatened that it will not supply oil to countries that accept the price cap. Russian Deputy Prime Minister Alexander Novak said on Moscow state television on Sunday that the country considers the tool a non-market economy and will develop a mechanism to ban the use of the cap. If Moscow holds out, this could lead to shortages and, consequently, higher prices.
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