Russia sanctions package: EU leaders must spend hours to settle differences
Belgian Prime Minister Alexander De Croo: There are some exemptions for certain countries. The Czech Republic is given an 18-month exemption to give it time to refine certain products. For other countries, like Hungary, for example, they will need a necessary period of time to adjust the operation of refineries and there is no specific timeframe. But the European Commission will check to make sure that process doesn’t take too long.
Dutch Prime Minister Mark Rutte: When you look at the big picture, it must be said that Hungary is in a difficult position, because they are using crude oil from Russia and their refineries are only suitable for the type of oil. that oil.
Mr. Charles Michel – President of the European Council: Today we have sent a strong signal after the past few days, there has been speculation about the risk of disunity of the European Union.
European Commission President Von der Leyen explained that EU countries will be able to finalize a ban on nearly 90% of all Russian oil imports by the end of the year. With the remaining 10%, which is oil supplied through pipelines, the EU will soon return to this issue.
The EU’s replacement of oil from Russia may face some difficulties
European countries can replace oil from Russia with oil from the Middle East, Norway, the US or West Africa. However, according to European analysts, the EU’s replacement of oil from Russia may face some difficulties. In the short term, refineries in Central and Eastern Europe have to bear additional costs if they do not import oil from Russia. Hungary, says it needs 550 million euros to upgrade two refineries designed to process Russian oil and switch to another source, while Slovakia’s refineries take three years to upgrade. device.
In addition, it is possible that Saudi Arabia and the UAE are cautiously shifting their oil sales to Europe for fear of losing their big customer, China. The EU has difficulty with oil from Iraq and Libya because the political deadlock and Iraqi infrastructure has not raised production. Iran is eligible to add oil to the market but is subject to US sanctions. The United States has the ability to increase production and sell more crude to Europe, but American oil is light and unsuitable for producing the diesel and gasoline that markets need.
The question now is where will the 2 million bpd that the EU comes here not to buy from Russia anymore. Or will the market be short of supply by 2 million barrels per day?
Russia has just announced that it will find other importers to replace the EU, the top potential customers at this time are India and China. Like India, according to independent assessments, this May imported crude oil from Russia up to 9 times the average level in 2021. But whether India, China and some Asian economies How much other 2 million bpd can be absorbed is still a question.
Because the US and Western sanctions also hit the Russian banking industry, it is not easy for countries to buy Russian oil. In addition, Russia’s oil exports to Asia will face the problem of transportation costs. For example, India, importing oil from the Gulf takes only 3 days, but from Russia it takes 25 days. Therefore, the price of oil will inevitably increase in the near future. Only hope that the EU embargo on Russian oil will only officially take effect from the end of this year. From now until then, with luck, the world will have positive changes from some sources such as Iran, Venezuela or the US shale oil and gas industry, for example.
Russia’s new oil ban has added pressure to an already tight crude oil market, with demand for gasoline, oil and jet fuel surging ahead of a peak in tourism. summer in different countries.
Crude oil prices have surged 60% this year due to concerns about supply disruptions from Russia. Now the EU will have to find a reasonable and quick alternative to help reduce the momentum of fuel prices, thereby curbing inflation. While Russia will also have to find new customers, the new market will be able to absorb the same amount of oil as Europe. This is a difficult problem for both Russia and the EU, but it is a possibility that both sides have considered before.
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