The EU intends to reduce Russia's revenues to a minimum.
In recent weeks, the number of news about the embargo on oil from Russia in the European Union (cessation of oil imports to the EU). Many experts believe that the oil embargo will “bury” the Russian economy, although Russia still believes that this is not the case.
It will be recalled that they are actively working with countries that resist the oil embargo. In particular, talks took place between French President Emmanuel Macron and Hungarian Prime Minister Victor Orban. In other words, it is likely that the EU will impose an embargo this week.
The EU has decided to speed up, as it is convinced that this will be the most radical measure against Russia. After all, oil is the main source of income for Russia. According to experts, before the war half of all revenues of the Russian budget are revenues from oil and gas exports (40% of oil, 10% of gas) . And the role of energy exports for Russia will only increase, because in the face of sanctions and economic downturns, exports of other goods will decline, as well as reduced revenues from taxes and duties.
How much is Russia losing? Russia sold about 70% of its gas and 60% of its oil and oil products to Europe. By the way, during the war, the EU paid Russia more than 20 billion euros for oil and more than 30 billion euros for gas. Russia will find it difficult to find a second such consumer as Europe.
I must say that the embargo on Russian oil has not yet been imposed, and demand for it has already fallen by 2 million barrels per day ( previously, Russia supplied the EU with about 8 million barrels of oil and petroleum products ). After all, many companies are beginning to refuse. Nearly 30 European refineries have shut down or announced plans to abandon oil from Russia.
According to experts, Europe will need to replace about 5 million barrels of oil per day with current consumption of 45 million barrels. This is possible because only in the strategic reserves of the members of the club of rich OECD countries now 1.5 billion barrels. Another 3 billion barrels are in private storage. There are options to increase oil production: existing spare capacity allows Saudi Arabia to increase production by 1-2 million barrels per day, more than 1 million can add the UAE and Iraq, and if sanctions are lifted from Iran, it is another 1 million barrels. Another 2.7 million barrels can be replaced by savings.
Can China and India replace the EU market ?
Until recently, Russia supplied to China about 20% of its oil and petroleum products . Now, first, China will not be able to dramatically increase purchases. Second, China and India care about energy security and will not depend on one supplier. Thirdly, to redirect oil, many tankers need to be hired, which still need to be found, plus transportation will be much more expensive than in the EU. Fourth, Russia has problems with sales, which means that potential buyers will trade (30% discount, with which they already buy Russian oil – not the limit). That is, even if all the oil and gas sold to Europe were taken away by India and China, Russia would still lose at least 30% . There will be other reasons. For example, slowing economic growth. China has reduced imports of oil (4.8%) and gas (by 8.9%).
Russia, of course, will find buyers for oil (even in Europe), but it will be difficult to trade. There are many options to circumvent the embargo (forgery of documents, transfer to sea from one tanker to another, etc.). But all this will affect the country's revenues.
Read also: Hungary still dissatisfied with EU proposals for sanctions on Russian oil
Earlier it was reported that the United States is releasing a record amount of oil from storage
