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No more diesel from Russia: What that could mean for Germany's drivers at the gas station

2023-02-05T18:25:59.476Z


Because of the Ukraine war, the EU cuts raw material deals with Russia. Now there is an import stop for diesel & Co. This could have consequences for the prices at the pump.


Because of the Ukraine war, the EU cuts raw material deals with Russia.

Now there is an import stop for diesel & Co. This could have consequences for the prices at the pump.

Brussels - The Ukraine war began almost a year ago.

The EU and other countries react to the invasion of Russian troops in the neighboring country with arms deliveries and embargoes.

The embargoes are primarily aimed at Russian supplies of raw materials, the proceeds of which Vladimir Putin uses to finance his war of aggression.

Energy embargo in the Ukraine war: A price cap for Russian refinery products will apply from February 5

Already at the beginning of December, the EU, the G7 and Australia imposed a price cap for Russian crude oil of 60 dollars per barrel and Russian crude oil may no longer be imported into the EU by tanker.

Since the beginning of January, Germany has stopped importing via the Druzhba pipeline.

Today, February 5th, the latest embargo came into effect.

From this Sunday, the price cap for Russian refined products decided by the EU, the G7 countries and Australia will apply if third countries buy them.

The price ceilings are 100 US dollars per barrel (around 93 euros for 159 liters) for fuels such as diesel, kerosene and gasoline and 45 dollars (around 42 euros) per barrel for less valuable products such as heating oil.

The combination of an import ban and a price cap is intended to “significantly reduce” Russia’s income and at the same time stabilize global prices.

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The embargo against Russian refinery products could increase the price of diesel in Germany.

© Alexander Pohl/imago

How should the price cap be enforced?

Important services for Russian exports, including transport by Western shipping companies or insurance companies, should only be allowed if the price of the exported goods complies with the upper limit set.

Embargo for Russian refinery products: Diesel could become more expensive in Germany

But the price cap will not only hit Russia, consequences are also to be expected for Germany.

It's all about diesel.

According to the Fuels and Energy industry association, in 2022 Germany covered around 12.5 percent of its diesel consumption from Russia, with replacements coming from the USA, Western Europe and the Arab world.

There is a 90-day fuel reserve for emergencies.

According to Fuels and Energy, there is no supply gap.

Petrol is not imported from Russia.

Nevertheless, it cannot be ruled out that diesel will become more expensive at the pump.

However, according to the Düsseldorf energy expert Jens Südekum, possible price increases are limited.

The reason is that before the embargo came into force, "hamster purchases" were made in the important ports of Rotterdam, Antwerp and Amsterdam.

“That means, before the embargo, you managed to get what was still possible.

The diesel depots are full to the hilt,” says the economist.

However, Thomas Puls from the Institute of German Economics points out that diesel is scarce on the world market.

If the EU no longer buys from Russia, the fuel will have to come from more distant areas, such as Saudi Arabia.

The capacity of the special ships is limited, the distances are longer and the transports are therefore more expensive.

Energy supplies to the EU: Russia has previously supplied 600,000 barrels of diesel per day

However, the Russian energy expert Alexej Belogoriev doubts that the EU can simply replace Russian supplies.

So far, Russia has supplied 600,000 barrels a day of diesel alone, while the USA, Saudi Arabia and India together come to 200,000 barrels.

Despite this, experts expect that the sanctions will reduce Russian production of petroleum products by 15 percent to about 230 million tons this year.

A Year of Ukraine War: The Origins of the Conflict with Russia

A Year of Ukraine War: The Origins of the Conflict with Russia

The following figures show the revenue for Russia.

According to the latest figures from the EU statistics office Eurostat, in October 2022 the country exported petroleum products such as diesel worth more than 2.3 billion euros to the EU.

At that time, products worth around 558 million euros went to Germany alone.

Consequence of the energy sanctions for Russia: The Kremlin is relaxed

While Russia won't admit it, sanctions on energy supplies will hit the country hard, albeit in the future.

Because in 2022, according to Deputy Prime Minister Alexander Nowak, income from the sale of gas and oil rose by almost a third.

Oil exports increased by 7 percent.

However, the EU embargo on crude oil on tankers only came into effect on December 5th.

There is no embargo on gas, but Russia itself has throttled exports to the EU.

The leadership in Moscow itself is relaxed.

The oil mixes on the world market anyway, there are other sales channels, for example in India.

However, Russia has to grant large price reductions, according to Südekum's information, about 30 percent compared to western types of oil.

Embargo on Russian refinery products: Third countries benefit from loopholes

However, according to research by the British weekly newspaper

The Economist

, Russia seems to have found ways to circumvent the oil embargo.

Accordingly, a gray market is developing with its own shipping and insurance capacities, partly based on guarantees from the Russian state.

Putin defended himself against the international price cap for crude oil by ordering him to stop delivering to countries that comply with it from February 1st.

Südekum also sees loopholes in the new level of embargo: “One of the main effects of the embargo will be that Russian diesel will no longer reach the EU directly, but will do so indirectly.

Russia delivers to nations like India or Saudi Arabia, who buy the cheap oil, process it in their refineries and then sell us the diesel.” That is not the point of the embargo.

List of rubrics: © Alexander Pohl/imago

Source: merkur

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