After coal and crude oil comes diesel. The ban on importing this hydrocarbon and other oil derivatives from Russia enters into force this sunday in the European Union and is added to the mechanism of sanctions for the invasion of Ukraine that seeks to financially suffocate the Kremlin.
“We anticipate that we will be ready to secure sufficient alternative supplies (…). We successfully went through a similar process with crude oil,” the energy spokesman for the European ComissionTim McPhie, referring to the veto on crude oil purchases in force since last December, which is added to that of coal in August.
Of the new prohibited derivatives, the biggest challenge is the ban on diesel, the fuel that use about half of the cars in the EU and most of the heavy and maritime transport and machinery.
Around 40% of EU imports came from Russia before the war, but Brussels is confident that the transition period from when the sanctions were announced in June to when they are applied in February has been “long enough” to guarantee “alternative supply routes and minimize the impact on global markets for refined products,” adds McPhie.
Until the invasion of Ukraine, the EU had a huge energy dependency on Russiay Putin has made cash in a year with a historic energy crisis.
Moscow has billed the EU 140,000 million euros in coal, gas and oil since the war began on February 24, 2022, according to the Center for Research in Energy and Clean Air (CREA), compared to 99,000 million in 2021.
However, the trend has been changing and in the last quarter of the year EU purchases of oil products from Russia fell to 14.14% of total imports, compared to 25.9% in the first quarter, according to Eurostat data.
“Our measures are hitting the core of the Russian economy,” The president of the European Commission, Usrula Von der Leyen, said this Thursday during a visit to kyiv, who celebrated in particular that the energy income that the EU provided to Russia is dwindling by around 160 million euros a day.
G7 sanctions
Parallel to the sanctions that Western countries apply in their own territories, the EU, the G7 (Germany, Canada, the United States, France, Italy, Japan and the United Kingdom) and Australia have established other measures that seek to hit the Russian energy sector also in the global market.
Since December, this bloc of Ukraine’s allies applies a ceiling of 60 dollars per barrel to the price at which its shipping companies can transport Russian crude to third countries.
These countries have just closed negotiations to establish another maximum for the transport of diesel and other Russian oil derivativesset at $100 and $45, respectively.
“This would allow Russian refined products (and especially diesel) to flow to third countries if they are sold below the cap. This will limit Russian revenue and prevent market tightness. So it will also help address inflation and keep energy costs stable, just like crude oil does,” McPhie reasons.
gas exemption
Oil and coal are products that are generally transported by ship and that they can be substituted in the global market.
Hungary negotiated an exemption to the import ban because it receives oil from Russia through pipelines, but the bulk of the Member States can turn to the United States, India and the Middle East to obtain oil.
But diversify the gas that travels through pipes is more difficult and the EU has never sanctioned that Russian hydrocarbon, Rather, it has been Moscow that has progressively reduced shipments to put pressure on Brussels until it went from 39.3% of imports in 2021 to 15% at the end of 2022.
Despite the notable drop in imports of 66% in volume, it has hardly been noted on the bill for a year of energy crisis where gas prices broke all historical records: Russia entered the EU about 51,333 million euros for gas purchases in 2022 compared to 58,000 million in 2021, when it pumped more than double.