By LORNE COOK and SAMUEL PETREQUIN
BRUSSELS (AP) — The European Union’s groundbreaking resolution to ban practically all oil from Russia to punish the nation for its invasion of Ukraine is a blow to Moscow’s economic system, however its results could also be blunted by rising power costs and different international locations keen to purchase among the petroleum, business consultants say.
European Union leaders agreed late Monday to chop Russian oil imports by about 90% over the following six months, a dramatic transfer that was thought of unthinkable simply months in the past.
The 27-country bloc depends on Russia for 25% of its oil and 40% of its pure gasoline, and European international locations which are much more closely depending on Russia had been particularly reluctant to behave.
European heads of state hailed the choice as a watershed, however analysts had been extra circumspect.
The EU ban applies to all Russian oil delivered by sea. At Hungary’s insistence, it incorporates a brief exemption for oil delivered by the Russian Druzhba pipeline to sure landlocked international locations in Central Europe.
In addition to retaining some European markets, Russia might promote among the oil beforehand sure to Europe to China, India and different prospects in Asia, regardless that it must provide reductions, stated Chris Weafer, CEO at consulting agency Macro-Advisory.
“Now, for the moment, that’s not financially too painful for Russia because global prices are elevated. They’re much higher than last year,” he stated. “So even Russia offering a discount means that it’s probably selling its oil for roughly what it sold for last year also.”
He famous that “India has been a willing buyer” and “China’s certainly been keen to buy more oil because they’re both countries who are getting big discounts on global market prices.”
Still, Moscow has historically seen Europe as its essential power market, making Monday’s resolution essentially the most important effort but to punish Russia for its struggle in Ukraine.
“The sanctions have one clear aim: to prompt Russia to end this war and withdraw its troops and to agree with Ukraine on a sensible and fair peace,” German Chancellor Olaf Scholz stated.
Ukraine estimated the ban might value Russia tens of billions of {dollars}.
“The oil embargo will speed up the countdown to the collapse of the Russian economy and war machine,” Foreign Minister Dmytro Kuleba stated.
Simone Tagliapietra, an power professional and analysis fellow on the Brussels-based suppose tank Bruegel, referred to as the embargo “a major blow.”
Matteo Villa, an analyst on the ISPI suppose tank in Milan, stated Russia will take a fairly important hit now however cautioned that the transfer might finally backfire.
“The risk is that the price of oil in general goes up because of the European sanctions. And if the price goes up a lot, the risk is that Russia starts to earn more, and Europe loses the bet,” he stated.
Like earlier rounds of sanctions, the oil ban is unlikely to influence the Kremlin to finish the struggle.
Moscow seized on the brand new sanctions to attempt to rally public assist towards the West, describing it as bent on destroying Russia.
Dmitry Medvedev, the deputy head of Russia’s Security Council who served because the nation’s president, stated the oil ban goals to cut back the nation’s export earnings and drive the federal government to scale down social advantages.
“They hate us all!” Medvedev stated on his messaging app channel. “Those decisions stem from hatred against Russia and against all of its people.”
Russia has not shied away from withholding power to get its approach. Russian state power big Gazprom stated it’s chopping off pure gasoline to Dutch dealer GasTerra and Denmark’s Oersted firm and can also be stopping shipments to Shell Energy Europe that had been sure for Germany. Germany has different suppliers, and GasTerra and Oersted stated they had been ready for a shutoff.
Gazprom beforehand stopped the movement to Bulgaria, Poland and Finland.
Meanwhile, the EU is urging different international locations to keep away from putting commerce obstacles on farm merchandise as Russia’s struggle will increase the dangers of a world meals disaster.
Ukrainian President Volodymyr Zelenskyy has stated Russia has prevented the export of twenty-two million tons of Ukrainian grain, a lot of it meant for individuals throughout the Middle East and Africa. He accused Moscow of “deliberately creating this problem.”
Russian oil delivered by sea accounts for two-thirds of the EU’s oil imports from Moscow. In addition to the EU cutoff of such imports, Germany and Poland have agreed to cease utilizing oil from the northern department of the Druzhba pipeline.
Agreeing on sanctions towards Russian pure gasoline is prone to show a lot more durable as a result of it represents a bigger proportion of Europe’s power combine.
“The very loud and clear message that Moscow will hear is that it will be near impossible for the European Union to get any agreement on blocking gas because gas will not be as easily replicated from other sources in Europe as oil will be,” Weafer stated.
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Associated Press journalists Yuras Karmanau in Lviv, Ukraine, Mike Corder in The Hague, Netherlands, Colleen Barry in Milan, Italy, and Derek Gatopoulos in Athens contributed to this report.
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Follow the AP’s protection of the struggle at https://apnews.com/hub/russia-ukraine
Source: www.bostonherald.com”