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Oil embargo against Russia: What the sanctions mean

2022-05-05T10:09:15.150Z


Oil embargo against Russia: What the sanctions mean Created: 05/05/2022 11:57 am By: Nail Akkoyun The oil alliance Opec+ is faced with the planned embargo on Russian oil. However, the group seems to be prepared for sanctions. Vienna – On Thursday (May 5), the oil alliance Opec+, led by Saudi Arabia and Russia, will discuss its future production strategy. How fitting that just a day earlier, on


Oil embargo against Russia: What the sanctions mean

Created: 05/05/2022 11:57 am

By: Nail Akkoyun

The oil alliance Opec+ is faced with the planned embargo on Russian oil.

However, the group seems to be prepared for sanctions.

Vienna – On Thursday (May 5), the oil alliance Opec+, led by Saudi Arabia and Russia, will discuss its future production strategy.

How fitting that just a day earlier, on May 4th, the European Commission presented plans for an embargo on Russian oil.

According to experts, however, the western plans are unlikely to shake the group.

There are therefore no signs of a change in strategy.

After severe production cuts at the beginning of the corona pandemic, Allianz has gradually increased its daily production targets by around 400,000 barrels (1 barrel = 159 liters) in recent months.

The signs point to a continuation of this cautious policy in June.

Oil embargo against Russia: will the sanctions affect the dynamics within OPEC+?

The Organization of the Petroleum Exporting Countries (OPEC) and its Russian-led allies stand shoulder to shoulder despite the Russian attack on Ukraine.

Opec does not address the Ukraine war directly, instead using terms such as "geopolitical tensions in Eastern Europe."

"You don't want to upset Russia," said analyst Giovanni Staunovo of the Swiss bank USB.

After Russia increased its exports in April instead of reducing them, there is no interest in the alliance to officially increase production targets more than planned to compensate for sanctions.

Where can Russia sell its oil in the future?

Especially to Asia.

India has recently been buying more cheap Russian oil from Russia, with which the South Asian economic powerhouse has had good relations for a long time.

China, which is not opposed to Moscow on the Ukraine question, is also a possible buyer.

However, demand from Chinese industry is still being dampened by Beijing's strict corona measures.

There are also signs of Russian oil being mixed with oil from other countries on large ships at sea, according to Edoardo Campanella of Unicredit Bank in Milan.

In this way, the origin can be disguised and the embargo circumvented, according to Campanella.

How important has Russian oil been in the EU so far?

Russia accounted for almost a quarter of the total value of oil imports from the European Union last year.

According to EU statistics, the shares of all other supplier countries remained below 10 percent.

The EU plans an embargo on Russian oil.

Almost a quarter of the oil deliveries in the European Union came from Russia last year.

© Bill Bachmann/Imago Images

Oil embargo against Russia: Which countries could supply more to Europe in the future?

"In principle, the USA could expand oil exports," said Carsten Fritsch from Commerzbank.

Even before the sanctions plans were announced, oil from strategic US reserves was coming to Europe.

In order for the producers in the United States to pump more oil for customers on the other side of the Atlantic, government incentives such as production permits are needed, said Fritsch.

There is also a labor shortage in the US oil industry.

Iran could in future deliver to the EU from among the OPEC countries – but only if the nuclear negotiations, which are at stake, are still successful.

Because then Washington would lift its embargo on Iranian oil.

In addition, Gulf states such as Saudi Arabia and the United Arab Emirates could export a little more.

Oil embargo against Russia: Does that also mean rising prices for consumers?

Analysts at least expect the price level for crude oil and products such as petrol and diesel to remain high.

Because if other countries deliver to Europe instead of Russia, customers in other regions will have less available.

"It's not like there's more oil on the market," Staunovo said.

Purchasing power in Europe would be impaired by the high prices.

According to Commerzbank economist Bernd Weidensteiner, while the sanctions plan gives EU countries enough time to secure other sources of oil, he sees another risk that could negatively impact energy prices: Russia could hit the oil embargo with a gas -Delivery stop to Europe react.

"That's a lot harder to replace," he said.

(nak/dpa)

Oil embargo against Russia: what it means for private households

Source: merkur

All news articles on 2022-05-05

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