More than two months after the start of the Russian invasion of Ukraine, the European Union is preparing to give up its first supplier of petroleum products. Ursula von der Leyen, the President of the European Commission, indeed presented this Wednesday a sixth package of sanctions against Russia, in order to dry up the financing of the war led by Vladimir Putin. Still subject to the validation of the Member States, this new salvo contains an unprecedented decision: to give up, within six months, all European imports of Russian oil.
What does the draft embargo contain?
The European Commission has proposed a gradual EU embargo on Russian oil. If the 27 member states vote in favor, “we will gradually give up Russian deliveries of crude oil within six months and those of refined products by the end of the year”, indicated Ursula von der Leyen before the gathered MEPs in Strasbourg.
“It will be a complete ban on imports of all Russian oil, transported by sea or by pipeline, crude and refined (…) in an orderly fashion, in a way that will allow us to put in place other supply routes,” she further explained.
Why wait six months?
This delay of six months for crude oil – or even eight for refined oil – is justified by the need for the EU to find alternatives to Russian supplies. “Although all the countries of the Union are required to have at least three months of oil in stock, an overnight shutdown would automatically create a whole series of logistical constraints that are difficult to overcome”, explains Patrice Geoffron, Director of the center of geopolitics of energy and raw materials.
In addition, there is no guarantee that OPEC +, which brings together the 24 oil-producing countries under the leadership of Saudi Arabia to regulate the oil market, will decide to increase production volumes. “It is very likely that Russia, an ally of Riyadh, will weigh in so that there is no significant increase in production,” judges the economist.
And indeed, as member nations are due to meet this Thursday, “there is a good chance that OPEC+ will once again limit itself to a marginal increase in total volume, of around 400,000 barrels per day”, believes Francis Perrin, research director at IRIS and specialist in energy issues. Nevertheless, “the EU should be able to count on the United States, which should increase its production capacity, and possibly on Iran if the Vienna nuclear agreement is finally ratified by Washington and the country is able to increase its production and export capacity,” he adds.
Can all countries do without Russian oil?
Although nearly 30% of European oil comes from Russia, the dependence of the Member States varies significantly. Finland, Slovakia, Lithuania and Bulgaria import almost 75% of their oil from Russia. This level is between 50 and 75% for Poland and Hungary, between 25 and 50% for Germany, the Netherlands and the Czech Republic and less than 25% for France, Spain, Italy or Portugal.
Ursula von der Leyen concedes, “it will not be easy” to do without it, “but we simply have to work on it”. “Since 2016, Europeans have been adopting a principle of solidarity in energy crises, it is moreover a mechanism that will play a role in the gas supply to Poland and Bulgaria, and which should once again make it possible to compensate for the dependence of certain countries”, emphasizes Patrice Geoffron.
Hungary and Slovakia, landlocked and totally dependent on deliveries by a Russian pipeline, quickly protested against the proposed embargo, the former even refusing to ratify a new round of sanctions that would “completely” destroy its “energy security”. These two countries, if they were to vote in favor of sanctions, “will nevertheless be able to continue their purchases from Russia in 2023, according to the project presented by the Commission”, notes Francis Perrin. “It erodes the strength of the signal a little, judge Patrice Geoffron. But from the moment when these countries are very small markets, the objective remains achieved. »
What impact on prices?
“By giving up its first supplier, Europe can only be faced with a significant price increase”, considers Patrice Geoffron. “No one can predict oil prices, warns Francis Perrin. But the impact should indeed be bullish, subject to the global economy, economic growth, or even the Chinese health situation and their effects on prices, ”he justifies.
In France, it is products derived from refined petroleum that should see their prices increase significantly. And in the first place diesel fuels: “France imports nearly 70% of its diesel from Russia, says Patrice Geoffron. It is for this same reason that the prices of these fuels had increased more sharply than those of unleaded at the start of the conflict. »