The new European package of sanctions against Moscow also includes the blocking of Russian oil imports by ship. An immediate ban of 75% of imports and 90% by the end of the year. The European Union imports every day between 3 and 3.7 million barrels of Russian oil, About 30-40% of Moscow’s production is around 10 million barrels per day. With the embargo, they would quickly disappear 1.7 million barrels. At current market values ($124 a barrel), the cut decided by Europe is worth around €200m a day, with end losses that could exceed €8bn a month. Naturally Russia can sell these cargoes elsewhere. Unlike gas, which is more associated with pipelines, crude oil is mainly transported by ship. China, India and other countries have already shown great interest in additional volumes of Moscow casks, especially when they are offered at discounts of up to $20-30 per barrel, as they are today. After all, the prices are so high (70% more than a year ago). the seller’s earnings are insured in any case.
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But Rystad Energy analysts, quoted by Reuters, say the most Moscow can do is redirect 1 million barrels previously destined for the EU. The Chinese economy is struggling and Indian refineries are already working to their full potential. This means a loss of sales of at least 3 billion euros per month during the initial phase of the embargo and then up to 4.5 billion once the full ban takes effect. There is no point in deluding yourself, the embargo will also be painful for Europe who in turn have to compensate for the lack of Russian cargo by purchasing from other suppliers and probably at higher prices. Back to Rystad the additional costs for EU countries could reach 2 billion euros per month. “We already have strong sanctions against Russian oil, and Countries considering buying Russian oil in particular, given the decision taken by the Europeans, they are in breach of the sanctions. If they do, they will blamed“. This was stated by the American Ambassador to the UN Linda Thomas Grunfeld Answering a question about new Asian buyers from Moscow Oil. “We hope they will all join us to make sure Russia doesn’t use them to violate the sanctions imposed to persuade Moscow to end the war in Ukraine,” he added.
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Russia is the third largest oil producer in the world after the US and Saudi Arabia. It has reserves for 107 billion barrelsthe sixth largest in the world after Venezuela, Saudi Arabia, IranCanada and Iraq. With the exception of Canada, these countries are all members of OPEC, the organization of major producers, which has so far refused to accept Western calls for increased production to lower barrel costs.
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