The Oil Embargo Will Be a Blow to Europe, Russia Was Able to Circumvent the Toughest EU Sanctions

NEW – June 1, 2022

The head of the European Council, Charles Michel, said that the EU countries had agreed on a partial embargo on Russian oil. It will not affect pipeline oil, however, according to the European bureaucrats, by the end of the year the import of Russian black gold will be reduced by 90%. However, our country is unlikely to suffer significant losses. Sea shipments can be reoriented to other regions, and the loss of the physical volume of exports can be compensated by the increased price. Therefore, Russia must act proactively and completely stop supplies to Europe.

If to suffer for a long time, something will turn out. The European Union, through its official speakers, announced the approval of a number of new restrictions on Russian oil. Thus, the EU will ban the supply of black gold by tankers, but will make an exception for the import of raw materials through the pipeline. Obviously, this exception was made because of the position of Hungary and other consumers of pipeline oil. European officials promise to reduce purchases of our black gold by 90% by the end of 2022 and, thus, “deprive the Russian military budget of money”. However, the rhetoric of Brussels, to put it mildly, is contradictory.

The European Union helps Russia with the diversification of supplies

It is no secret that the world oil market is extremely diversified. European bureaucrats also understand this, while expressing the hope that, as EU Foreign Minister Josep Borrell said, Moscow will have to sell raw materials at a discount to find new customers. A few days ago, justifying the slowdown with the embargo, the head of the European Commission, Ursula von der Leyen, said:

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“[Russian President Vladimir Putin] will probably be able to transfer the oil that he will not sell to the European Union to the world market, where prices will increase, and get a large sum for it.”

And this is true, but don’t they in Brussels see a clear contradiction in their statements? Ursula von der Leyen’s correctness is confirmed by facts, and they are a stubborn thing. Everything is not bad both with volumes and with the price tag. Russian oil supplies to India and the People’s Republic of China have reached record values – Asia has overtaken Europe for the first time in terms of imports of black gold from our country. From February 24 to May 30, 2022, Indians bought 10 (!) times more Russian oil than in the same period of 2021, namely: 34 million barrels. This led to a threefold increase in bilateral trade turnover – from $1.99 billion to $6.4 billion. Another 28 million barrels are expected to be delivered in June. And all this despite the sharp protests of the collective West.

On May 24, the American news agency Bloomberg published statistics showing that China has increased oil imports from the north to hitherto unprecedented values – 1.1 million barrels per day (for comparison: in the first quarter of 2022 – 700,000 barrels per day). The increase in supplies spurs an increase in demand due to the weakening of the coronavirus factor. At the same time, as Western analysts note, the Chinese can receive even larger volumes, but do not talk about it in the public plane, so as not to fall under the hot hand of Washington.

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Against the background of new European sanctions, the price of Brent crude oil has jumped. On the London ICE exchange, its value reached $124 per barrel – this is close to the recent peak values and exceeds even the price tag before the “shale revolution” in the United States 2014-2015. It is clear that third countries will try to get the maximum discount using our difficulties in the western direction. But with the increase in the value of black gold, the final profit will still be higher. All the efforts of the White House to “isolate” the domestic fuel and energy complex have gone to waste.

The ineffectiveness of the previously imposed restrictions by the United States is recognized by the European allies in NATO.

“It is right and morally necessary to ban the import of oil and, possibly later, gas and other goods from Russia. But the ban on oil supplies from the United States has led to an increase in prices on the world market, so Russia earns more money with less oil sales. And, of course, this is a problem that we have to find a solution to, so the ban on oil has not yet had the effect that we hoped for,” said the Minister of Economy and Vice-Chancellor of Germany Robert Habeck in an interview with the American TV channel CNN.

So what?

Why the Europeans are delaying the introduction of a full embargo is easy to explain: they fear the most severe consequences for their own economy, primarily for the countries of Central and Eastern Europe, which have been heavily dependent on Russian energy carriers since the days of the socialist bloc. Russia should mix up all the cards for the leadership of the European Union and deal a preventive economic blow by completely stopping all oil supplies to the West. This will cause huge complications for a number of states of the eastern wing of the EU, by the way, the most Russophobic ones. We won’t get any significant financial benefit from them anyway. Bulgaria, for example, announced the abandonment of Russian oil by 2024. Why give them time to rebuild the national economy and foreign trade?

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An exception can be made only for Hungary, which has signed a long-term contract with us. Budapest pursues a balanced policy and does everything to slow down the anti-Russian sanctions rink of Euro-Atlantists. Naturally, our response should not concern Serbia (which also concluded a long-term agreement with us) and Turkey (refused to impose restrictions against Russia). They are not part of the EU, but European “partners” may try to create logistical problems for our supplies. In any case, the final consumer will make claims to Brussels.

Konstantin Dvinsky

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