The EU embargo on Russian oil, a good deal for Moscow, really?

The EU embargo on Russian oil, a good deal for Moscow, really?


Plus a drop (or almost). By the end of the year, almost 90% of imports of oil in the EU will be banned, hit with sanctions 27. A decision that would not be so bad for the Moscow regime, however, some believe that Russia would benefit from the current petroleum products. This is also the argument that partly used Marine Le Pen at the France Info microphone on June 7: “Russian oil will be sold to others,” she said launched.

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Does that mean the announcement of the embargo would have done business for Russian exporters? Julien Vercueil, a professor of economics at Inalco (National Institute of Oriental Languages ​​and Civilizations), notes that which largely offset the decline in quantities sold. However, the researcher, who specializes in the Russian economy, notes that Russia “has no direct influence” on the price, “which depends on global market conditions.”

These conditions have also been favored by “the discount of $ 20 to $ 30 a barrel of Russian oil, which is a strong incentive for buyers.” advance in a note IFPEN, a public energy research body. This discount “explains the stability of Russian sales until April despite the US embargo and declining sales to the EU.”

“EU accounts for just over half of Russian oil exports”

On the other hand, if “since the beginning of the war the rise in crude oil prices has been trending,” prices could change rapidly if two factors were involved, remarks Julien Vercueil: “The first would be a policy of the OPEC aims to significantly increase production – a first move, still timid, in this direction was made in early June. The second is the slump in oil demand due to the global economic downturn. The combination of these two trends has not yet been observed.

Despite this current rise in oil prices, the loss of this market in the EU market is not good news for the Russian oil industry. The researcher even described the loss as “critical for Russian exporters”. “The EU accounts for just over half of Russia’s oil and oil exports,” he said. Oil and petroleum products are also heavyweights in the Russian economy, accounting for “about 43% of Russia’s total export earnings” last year.

India and China, new opportunities?

Russia could turn to other markets, such as India and China. These two countries have “the double advantage of being two big consumers of oil and of not having condemned the war of invasion of Ukraine,” explains Julien Vercueil. However, will this be enough to “absorb” all the oil that was previously intended for the 27? This is not guaranteed, the researcher added: “India and China will not be able to substitute Russian oil for the oil they usually buy from other suppliers as long as it remains within the limits they consider. as economically and geopolitically acceptable. It is more globally across Asia, including Southeast Asia, that Russia will have to turn to oil, with the same uncertainty as India and China. »

Another difficulty for Russian exporters is that with this embargo they lose the opportunity to transport some of the oil by pipeline. Exports should therefore focus, at least in part, on ports and ships. “This postponement may bump, if not into bottlenecks, at least the extra costs associated with these new routes.” »

“We can be sure today that these sanctions will be costly for Russian exporters.”

To respond to the sanctions, some actors in the Russian oil industry could imagine “circumventing the sanctions,” notes the researcher. A risky strategy, due in part to controls.

Looking for new markets, circumventing sanctions, whatever the Russian responses to this embargo, and even “if it is difficult to [les] In advance, we can be sure that these sanctions will be costly for Russian exporters and will reduce, in any case, the foreign exchange and tax revenues of the Russian state. »

Russia wants to expand its liquid gas exports

These revenues could also be impacted if the 27 were to decide on an embargo on Russian gas imports. If the subject is far from unanimous among Europeans, on Saturday, Thierry Breton, the European Commissioner for the Internal Market, said “Prepare” for such an eventuality. Europe is even more dependent on Russia for this market than for oil, recalls Julien Vercueil: “In 2021, 45% of EU imports and 40% of gas consumption came from Russia. »

Here again, Russia is developing strategies to deal with possible blows to the 27, including “seeking to expand its exports of liquefied natural gas.” These exports go through ports and not through pipelines. However, the development of the infrastructure needed for this trade “is expensive and time consuming,” concludes Julien Vercueil.

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