After weeks of intensive negotiations, the European Union has agreed on a sixth package of sanctions against Moscow. Its main element is the cessation, by the end of this year, of oil imports from Russia delivered to the bloc’s market by sea.
According to President of the European Commission Ursula von der Leyen, this will reduce Russian supplies to the EU by 90%, with the remaining 10% lined up for the chop in the future.
The percentage share is a debatable issue, but the assessment of the head of the European Council, Charles Michel, who announced the ban on two-thirds of Russian raw materials, looks more realistic. For Russia, the main thing so far is not quantity, but quality. Pipeline routes, unlike maritime routes, cannot be redirected elsewhere; a ban would have meant decommissioning the Druzhba pipeline and losing this delivery method. This did not happen due to the persistence of Hungary, which was secretly supported by several other countries.
As for tankers, the global oil market is unified, and until a global trade embargo is imposed against Russia (which is almost impossible), goods will be sent to other consumers, mainly those in Asia.
At the same time, the price per barrel continued to rise after the announcement of the new measures. So Russia, in terms of revenues, will continue to benefit in the near term, at least.
Even considering the discounts that customers from Asia will receive, they are always sensitive to the narrowing of their partner’s room for alternatives. However, the timeframe for the full implementation of even Brussels’ already agreed upon solution is still unknown.
Industry experts have unanimously agreed that there is no substitute for Russian oil in the EU at the moment, as the volumes available on the market are limited. So it cannot be ruled out that after the loud political declarations have faded from the headlines, there will be a very cautious and gradual implementation. In any case, the most interesting aspect of this story is not the tactical, but the strategic aspect.
Let’s assume that the EU does set a clear political goal of ending energy cooperation with Russia, and in the medium-term it will be possible to implement it. What would this mean for the world order?