Russian oil is still flowing strongly into the EU
The Economist Citing data by Argus Media, Russia’s oil supplies to the European Union (EU) increased 14% between January and April, from 750,000 to 857,000 barrels per day.
This comes amid calls from Brussels to completely stop importing energy from Russia. The latest EU embargo on Russian oil applies only to oil products transported by sea, which currently accounts for 75% of imports from Moscow.
Under the latest EU sanctions package, Russian oil is still allowed to be supplied via pipelines to a number of countries in Central and Eastern Europe. Refiners in these countries are selling cheap Russian crude.
Germany has been reducing oil imports through Russia’s Druzhba pipeline since the outbreak of hostilities in Ukraine. Druzhba is one of the longest and largest oil pipeline networks in the world with some 4,000 kilometers running from Russia to refineries in the Czech Republic, Germany, Hungary, Poland and Slovakia.
The Czech Republic and Slovakia support a ban on imports through Druzhba, but want an adjustment period of two to three years. Meanwhile, Hungarian Prime Minister Viktor Orban opposed an outright ban on Russian oil imports, saying it would drop an “atom bomb” on the country’s economy.
Follow The Economistwhile Urals crude is trading significantly below the international benchmark Brent, there will be no financial incentives for refiners to abandon Russian supplies. Argus Media data shows that refiners importing through the pipeline bought Urals crude at a discount of up to $40 a barrel from Brent last month.
The Economist cHe also revealed that EU leaders emphasized that the exemption of oil imported from Russia through the Druzhba pipeline would be reviewed.
The EU has been divided over steps to end dependence on Russian energy. Europeans are grappling with inflation, soaring energy and food prices as the EU imposes tough sanctions on Russia.
So far, the EU has launched 6 sanctions packages on Russia. The EU imports about 45% of gas, 25% of oil and 45% of coal from Russia. The European economy is forecasted to face difficulties without imported energy sources from Russia.
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