War in Ukraine. Three questions about the embargo on Russian oil, the most severe sanction

Meeting of the energy ministers on Monday 2 May, the ambassadors of the 27 Member States on Wednesday in Brussels… Telephones and video conferences are heating up in all the capitals of the Union. Objective: to reach an agreement, which must be unanimous on this point, to impose a phasing out of purchases of Russian petroleum products by the end of the year.

If the Commission’s project, to be presented on Wednesday, is validated by the States, it will be sixth train of sanctions since the beginning of the invasion of Ukraine on February 24 would have the most serious consequences for Russia. Most likely also taking revenge. That is why Brussels is also working on a Russian response. On April 27, Putin turned off the gas tap to Poland and Bulgaria. on the grounds that they did not pay in rubles as he desired. However, companies from several countries, especially Germany, will have to make payments to Gazprom in the coming weeks.

Why is this embargo so important?

Simply because the European Union is putting billions of euros on the table (12.3 so far, a combination of military, economic and humanitarian aid) to help Ukraine defend itself against an aggressor it funded in 2021 to the tune of… 100 billion because of its hydrocarbons (!), according to the International Energy Agency [Ici, en anglais]

An embargo on Russian oil, which brings much more to Moscow (80 billion in 2021) than gas (20 billion), would be a very serious blow. It also has the advantage of being less complicated to manage, and thus less painful, for Europeans who are less dependent on gas than on Russian oil.

Of course, Russia will have the opportunity to sell its oil to other customers. In theory, this is easier than for gas, delivered via expensive pipelines or LNG terminals. But in reality, the operation is complex and does not apply to all production sold in Europe today.

Why is this embargo so complicated?

It implies the unity of the 27 European states. However, not all are equal in the face of Russian oil. Two countries in particular pose a problem: Slovakia and above all Hungary by Viktor Orban, Putin’s last friend in the EU. These two landlocked countries are supplied almost exclusively through Russian pipelines. They have no gates and will not say Yes ​if their EU partners offer them alternatives. What a price will have.

The other pitfall is the risk that, by seeking supplies elsewhere and given the weight of the European economy, world prices will rise, or even an oil shock and a global recession.

What is the Commission’s strategy?

Go gradually! The plan is to cut imports by the end of the year so that the alternatives can be introduced and the world market is not weighed down. Brussels has also started to implement this strategy by announcing it a few days ago.

the 6th series of measures​, who plans to impose sanctions Russia’s entire oil ecosystemAccording to Commission President Ursula von der Leyen, it also includes other levers. By the end of the year, but also for the residual quantities that the EU could not do without, it plans to tax the transport of Russian oil by tanker. And to embarrass Russia, Sberbank, the institution that represents 37% of the Russian oil market, should be excluded from the Swift interbank transaction system.

War in Ukraine. Three questions about the embargo on Russian oil, the most severe sanction