May 23, 2022

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Europe is turning its back on Russian coal.  Is oil next?

Europe is turning its back on Russian coal. Is oil next?

All Russian coal will be banned from the European Union, a move the European Commission said on Friday would affect about 8 billion euros ($8.7 billion) in Russian exports annually. An EU source said that Europe plans to reduce imports over the next four months He told CNN Business.

It’s the first time that Europe comes after that Russia’s massive energy sectorbut it did not go far enough for Ukraine, which on Friday reiterated its call for an oil embargo after a missile attack on a railway station in Kramatorsk, Ukraine, killing about 30 people and wounding hundreds, according to President Volodymyr Zelensky.

“How long can Europe ignore a ban on oil supplies from Russia?” Zelensky said.

The European Commission says about 45% of the EU’s natural gas imports, and about 25% of its oil imports, come from from Russia. The European Union has imported 35 billion euros ($38 billion) of Russian energy since the war began.

Coal was always the easier target: Europe imports nearly half of its coal from Russia, but demand for the world’s dirtiest fossil fuels was already dwindling, Alternative supplies are more readily available than natural gas.

Until now Shocking reports from Bucha Kramatorsk has increased pressure on European Union leaders to also consider banning or restricting oil imports from Russia.

How likely is an oil embargo?

Russia is the world’s second largest crude oil exporter, after Saudi Arabia, and accounted for 14% of global supply last year, according to International Energy Agency. Nearly two-thirds of its exports went to Europe before Russia invaded Ukraine.

In March, Europe identified Deadline 2027 To wean itself off Russian gas and oil. But the oil embargo that begins much earlier is now on the table. European Commission President Ursula von der Leyen told the European Parliament on Wednesday that the fifth package of sanctions “would not be like this”. [its] the last.”

“Yes, we have now banned coal, but now we have to look at oil,” she added.

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French President Emmanuel Macron was one of the first leaders to publicly support a comprehensive embargo on Russian oil. Speaking to a French radio station on Monday, Macron said there were “very clear indications” that war crimes had been committed in Bucha and that Europe “We can’t let it slip.”

On Friday, French Finance Minister Bruno Le Maire told CNN that France did not want to wait for a Russian oil embargo after witnessing the rail attack earlier in the day.

“With regard to France, we are ready to go further and decide on the oil embargo, and I am deeply convinced that the next steps and future discussions will focus on the issue of the Russian oil embargo,” he said.

German Chancellor Olaf Schulz said on Friday that he believed Germany would be able to stop importing Russian oil “this year”. Speaking at a news conference with British Prime Minister Boris Johnson during a visit to London, Schulz said Germany was “actively working” on independence from Russian oil imports, but added that it would take longer for Germany to phase out Russian gas.

More details about oil sanctions may be brought up on Monday when EU foreign ministers meet for talks. Options on the table include taxing oil imports and forcing buyers to pay into an escrow account that can only be exploited by Russia under certain circumstances.

Persuading all EU member states to agree can be difficult. Reliance on Russian oil varies widely across EU countries. Hungary is particularly exposed, and Viktor Urban, The New Country Re-elected Prime Minister And President Vladimir Putin’s longtime ally, he could spoil any proposals.

“While we condemn the Russian armed attack and we also condemn the war, we will not allow Hungarian families to be forced to pay for the war,” Orban said in a statement in early March.

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He added that “the sanctions should not be extended to the oil and gas regions.”

Can Europe cope?

While penalties for Russian natural gas It is unlikely at this point that due to the economic damage it might cause, Europe could better withstand an embargo on Russian oil.

The US, UK, Canada and Australia have announced a ban on Russian oil, and a broader de facto ban has already been put in place as banks, merchants, shippers and insurers try to avoid falling into financial sanctions.

European oil companies including Shell, TotalEnergies and Neste have either stopped buying Russian crude, or will do so by the end of this year.

The price of Brent crude, the global benchmark, rose in early March to briefly surpass 139 dollars per barrel – 14-year high – but has since fallen back to trade around $100 a barrel. Russia’s Urals crude is trading below that at about $34, Standard Discount.
In recent days, rich countries have promised to benefit from their oil reserves to help lower prices and counteract reduced Russian supplies. In March, the United States announced that it would release them 180 million barrels. The member states of the International Energy Agency followed suit, adding another 60 million barrels for global stocks.

Claudio Galimberti, Vice President of Analysis at Rystad Energy, He said that the impact of the EU oil embargo on Russia will depend on the extent to which exports can be diverted to Asia.

He said, “As long as it manages to divert most of its oil exports from Europe to Asia, the effect may be – relatively – not great. Otherwise, it will completely paralyze the Russian economy, because it is highly dependent on oil exports.” CNN Business.

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While Europe accounts for more than half of Russia’s oil exports, China is the single largest buyer, accounting for about 20%, according to the International Energy Agency.

CNN’s Chris Liakos, Niamh Kennedy, Mark Thompson, Emmett Lyons and Sugam Pokharel contributed to this report.