Diplomats: Russia could declare war on Ukraine “officially” on this date

Economic analysts expect Russia to suffer the most this week as the European Union moves to impose a ban on Russian oil.

The New York Times says that “Russia’s decades-long dominance of the energy market in Europe could collapse.”

The newspaper quoted analysts as saying that it would be possible to break oil ties between Europe and Russia, but this attempt would take time and could lead to shortages and higher prices for petrol, diesel, jet fuel and other products, a situation that can get tired. consumers already suffering from inflation, and ultimately hindering the economic recovery from the Corona epidemic.

Ban could end “Europe’s dominance” of European energy imports

complicated matter

“It will loosen two very intertwined parts of the global energy system,” Richard Bruns, head of geopolitics at Energy Aspects, told the newspaper. “There will be disruptions and costs involved, and it will be complicated.”

“But policymakers are increasingly convinced that it is necessary and best to do so relatively quickly, whether to try to reduce revenue to finance Russia or to limit European exposure to Russian influence,” Bruns said.

The move against oil will be part of an effort to end Moscow’s ability to “arm Europe’s oil needs,” according to analysts who spoke to the newspaper.

“The oil system can rebuild itself,” said Oswald Klint, an analyst at Bernstein Research, adding that oil is a “very deep, liquid and replaceable market” served by thousands of tankers.

About 25 percent of Europe’s crude oil comes from Russia, but there are large differences in the level of Russia’s dependence between countries in the European Union.

Britain, which is not a member of the European Union and has oil production from the North Sea, has said it will phase out Russian energy.

Spain, Portugal and France import relatively low amounts of oil from Russia.

Europe needs to adapt its refineries to accommodate new types of oil

Europe needs to adapt its refineries to accommodate new types of oil

On the other hand, countries such as Hungary, Slovakia, Finland and Bulgaria import more than 75 percent of their oil from Russia and may find it difficult to find alternative sources.

Hungarian Foreign Minister Peter Szyjjarto said on Tuesday it was “substantially impossible to run Hungary and the Hungarian economy without Russia’s crude oil.”

While concerns focus on gas pipelines, large amounts of oil also flow from Russian oil fields through the Druzhba pipeline, whose northern branch feeds Germany and Poland, while the southern pipeline goes to Slovakia, the Czech Republic and Hungary.

On the other hand, it seems that Germany and Poland are now determined to end their dependence on Russian energy, and this change of opinion in Germany seems to be the key to the change of European politics. Germany plans to import oil through the eastern port of Rostock, as well as from across the border into Poland from the port of Gdansk.

The German government says it has been able to terminate contracts for Russian crude oil, with the exception of the Schweidt refinery and another refinery in East Germany called Leona, which together account for about 12 percent of the country’s imports from Russia.

Prices rose around the world after the war

Prices rose around the world after the war

Different types of oil

It could take up to four years and $ 700 million to recalibrate his company’s refineries to accept other types of oil in the event of a Russian oil embargo, the newspaper quoted Zolt Hernady, president of the Hungarian Petroleum Corporation.

Analysts say the embargo could lead to costly competition for alternative sources of oil.

Of the likely alternatives to Russian oil, only Saudi production is appropriate, says Victor Katona, an oil expert at Kepler, who monitors energy flows.

So far, the Saudis, who will lead a meeting of OPEC Plus on Thursday, have shown little tendency to increase their production significantly, according to the newspaper.

Katuna said Iranian oil could also work, but U.S. sanctions continue to hamper Iranian fuel sales.

Venezuela oil, which is also hampered by sanctions, is often cited as a possible exchange for Russian crude oil.

Katona said the ban “would cause considerable pain to European refiners, and therefore to European customers”.

So far, the pressure on Russia seems to be rising, and so is the revenue coming to Russia from the sale of oil.

Rystad Energy, a consulting firm, predicts that while Russian oil production is likely to decline in 2022, the Russian government’s total fuel revenue is likely to increase by about 45 percent, to $ 180 billion.

Russia also finds buyers for its oil in India and, to a lesser extent, Turkey, where buyers benefit from huge discounts, according to the newspaper.

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