Enlarge image
Clandestine shipments of Russian oil:
One way to stop this is by sanctioning tankers
Photo: Marcos Moreno/ dpa
The EU countries have been negotiating an oil embargo against Russia for days, but so far they have not been able to reach an agreement.
EU Commission President
Ursula von der Leyen
(63) proposed a boycott on Wednesday that would allow a transitional period of six months for Russian crude oil and a transitional period of eight months for oil products - with exceptions for particularly dependent countries.
Hungary and Slovakia should even have until 2023 before stopping oil imports from Russia.
But that's not enough for them, and the Czech Republic is still blocking it.
There are indications that the EU will make further concessions.
The transition period could end up jeopardizing the effectiveness of the sixth sanctions package.
"The aim of our sanctions is to stop the ruthless, inhuman and aggressive behavior of the Russian troops," said EU foreign policy chief
Josep Borrell
(75) last week.
This goal can only be achieved if the EU succeeds in exerting maximum pressure on Kremlin dictator
Vladimir Putin
(69) and massively damaging his economy.
The following overview shows what is important:
How sensible is the planned transition period?
The most important thing is the right timing.
The decisive factor is how much time Russia has to prepare for an embargo and to find new buyers for its oil, says
Janis Kluge
, Russia expert at the Stiftung Wissenschaft und Politik.
"It is therefore important that the measures come quickly now".
Kluge speaks of a "race against time."
If the embargo is gradually introduced by the end of the year, Putin will have time to develop new export strategies with buyer countries such as India and China, which do not support the sanctions.
As a result, the embargo is no longer effective, write economic experts at the Bruegel think tank.
The Russian president has already instructed his ministers to draw up plans for new export infrastructure to serve "friendly markets".
However, the diversion of deliveries to new customers is not likely to be easy for Moscow.
So far, a large part of Russia's export routes have been heading west, after all, Europe buys 70 percent of Russian oil exports.
Moscow's only oil pipeline to China, which takes just a fifth of oil exports, is operating at full capacity, according to the FT.
So Russia would have to ship its oil from ports in the Baltic States and on the Black Sea to Asia in giant tankers.
However, the availability of the ships is also limited, and some ship owners avoid trading with Russia.
With a view to supplying Germany or other EU countries, others see the transition period as too short.
Brandenburg's Economics Minister
Jörg Steinbach
(SPD) considers six months for the changeover to be "very ambitious".
The planned EU embargo poses challenges for the PCK refinery and thus for the Brandenburg and Berlin region.
Economics Minister
Robert Habeck
(52) considers the period to be sufficient, but at the same time warns of regional bottlenecks.
How to deal with countries like China and India that continue to buy Russian oil?
The success of the EU states' embargo also depends on the extent to which the West persuades other actors to stop buying Russian oil or at least not to circumvent the sanctions.
According to expert Kluge in an analysis by the Heinrich Böll Foundation, only an embargo along the lines of the Iran sanctions would have any real impact.
"With the threat of secondary sanctions, Washington could also be relatively effective in deterring oil traders in India and China from buying Russian oil."
As a result, Moscow's oil exports would fall noticeably and Putin might have to close wells that cannot be tapped again later.
The price of oil should then also increase sharply.
The US has great leverage in such a move because of the centrality of its financial system and the role of the dollar as a global reserve currency.
However, it is currently not to be expected that the West will take on Russia after Russia and impose secondary sanctions on China.
India and China are therefore likely to continue to buy Russian oil at high discounts
, which the Europeans no longer want, and thus emerge as clear beneficiaries of the EU embargo.
According to Bloomberg, India has bought 20 percent more oil from Russia since the Ukraine war alone than in all of 2021. The South Asian economic powerhouse has had good relations with Moscow for a long time.
Recently, India apparently tried to get further price reductions and referred to the hurdles and risks that trade with Russia is currently entailing.
If Russia's oil companies have to give in to discount demands and sell at a lower price, it will still dampen Russia's oil revenues.
China, which is not opposed to Moscow on the Ukraine issue, could also increase its purchases from Russia in the future.
However, demand from Chinese industry is still being dampened by Beijing's strict corona measures.
How are actors involved in oil trading monitored?
The actors involved in oil trading are currently looking for ways to circumvent sanctions.
This happens, for example, with tankers that are labeled "Destination unknown": Often an indication that the oil is taken to sea, loaded onto another ship and mixed with other types there.
In the end, it is no longer clear where the freight actually came from.
This practice has already been used for exports from the sanctioned countries of Iran and Venezuela.
The maneuver can now also be observed more frequently since many market participants have imposed sanctions on themselves in order to satisfy public calls for a boycott.
Simon Johnson
(59), economics professor at MIT and former chief economist at the International Monetary Fund, sees sanctions for tankers
as one way of stopping this activity .
If the aim of the sanctions is to reduce funds to Russia, the West should ban all Russian oil exports and the transport of such goods in European-owned tankers.
"This blanket provision would trigger force majeure clauses in most contracts with shipowners, oil dealers, insurance companies and other financial services providers, allowing them to terminate existing contracts without penalty," Johnson said in a paper with MIT colleague Anette hosoi
The embargo also requires clear specifications for the origin of the oil.
Mixtures of products such as diesel and heating oil with a Russian component can be banned.
As for the raw materials, the question of their origin is more difficult to clarify.
Are oil products processed from Russian crude oil in an Indian refinery Russian or Indian?
With Indian origin, the oil could continue to Europe.
This should increase supply for Europe while further supporting Putin's oil deal.
The oil companies are currently defining for themselves when oil is considered to be of Russian origin.
In Shell's eyes, a cargo of oil is not technically of Russian origin as long as up to 49.99 percent is from Russia and the other 50.01 percent is from other sources, according to Bloomberg.
The oil giant sells this as "Latvian mix" in the market.
Since the EU has not yet imposed an embargo on Russian oil, oil giants have been able to legally use this backdoor to continue sourcing Russian oil while officially declaring they are turning their backs on it.
How will the embargo affect oil prices?
The effect of an EU oil embargo on oil prices depends on several factors.
Federal Economics Minister Habeck warns of high price jumps, since Russian oil will have to be replaced by probably more expensive alternatives from other countries.
In addition, there are costs for the conversion of refineries and delivery routes.
Numerous analysts also expect the oil price to rise.
According to
Michael Holstein
, chief economist at DZ Bank, the oil embargo has the potential to push the price of oil up quite a bit over the next few months, at least temporarily.
This would then also affect the inflation rate in Germany, which could remain at a high level for longer.
A lot depends on how quickly the production of the other oil-producing countries can be increased and brought to market.
On the other hand, energy expert
Klaus-Jürgen Gern
from the Kiel Institute for the World Economy dares to predict that drastic price increases would not be inevitable - at least for an embargo with a transitional period.
Gern sees the reason for this in the already announced gradual move away from Russian oil, which is already taken into account in the currently high prices.
A higher oil price would play into Putin's hands, who would then be able to sell his oil to Asia at high prices.
One risk, therefore, is that an embargo could drive up international oil prices so much that Russia would end up making just as much money from fewer exports as it did before - unless China and India insist on large rebates.
Ultimately, the effect will depend on what Brussels wants to achieve with the embargo.
If it wants to completely stop Russian exports, Russia may have to close some of its oil fields and make oil massively more expensive worldwide.
If Europe no longer wants to buy Russian oil, there is likely to be a shift in trade with less severe consequences for Europe.
dri with news agencies