Soon after the world’s largest trading bloc agreed to put a partial embargo on Russian crude, Moscow committed to find new importers.
The European Union resolved on Monday to restrict most Russian oil imports by the end of the year as part of fresh sanctions aimed at punishing Russia for its unjustified invasion of Ukraine.
The measure was hailed as a “landmark step to undermine [Russian President Vladimir] Putin’s war machine” by EU foreign policy leader Josep Borrell.
It applies to Russian oil imported into the EU by sea, with an exception made for pipeline imports in response to Hungary’s resistance.
The EU’s long-delayed sixth package of measures against Russia required consent from all 27 member states and is still awaiting formal ratification.
In response to the restrictions, Russia’s permanent envoy to international organisations in Vienna, Mikhail Ulyanov, said the oil boycott reflects adversely on the EU.
“As she rightly said yesterday, #Russia will find other importers,” Ulyanov said via Twitter, referring specifically to European Commission President Ursula von der Leyen. The commission is the executive body of the EU.
“Noteworthy that now she contradicts her own yesterday’s statement. Very quick change of the mindset indicates that the #EU is not in a good shape,” he added.
Von der Leyen praised the EU’s agreement on oil sanctions against Russia. She stated that the strategy will effectively cut roughly 90 per cent of Russian oil imports to the EU by the end of the year, and that the issue of the remaining 10% of pipeline oil would be addressed soon.
Approximately 36 per cent of the EU’s oil imports originate from Russia, a country with a disproportionate position in global oil markets.
To be sure, Russia is the world’s third-biggest oil producer, trailing only the United States and Saudi Arabia, and the world’s largest crude exporter to global markets. It is also a major natural gas producer and exporter.
Ukrainian leaders have frequently demanded that the EU impose a complete embargo on Russian oil and gas, despite the fact that energy-importing countries continue to replenish Putin’s war chest on a daily basis.
Estonia’s prime minister, Kaja Kallas, called on the EU on Tuesday to go even farther and consider a Russian gas embargo in the next round of penalties. However, Austria’s chancellor, Karl Nehammer, quickly rejected this plan, stating that it will not be discussed in the next batch of measures.
The split comes as Russia’s state-owned energy behemoth Gazprom has completely cut off supplies to Dutch gas trader GasTerrra, and Denmark’s Orsted has warned that it, too, is facing a supply standstill.
Tuesday afternoon, oil prices soared.
Brent crude futures increased 1.5 per cent to $123.48 a barrel, while West Texas Intermediate futures increased 3 per cent to $118.56.
In response to the Kremlin’s bombardment, European Council President Charles Michel said the deal on oil sanctions reaffirmed the bloc’s solidarity. It was assumed that failing to reach an agreement would be interpreted as a victory for Putin.
“I think it is as good as could be achieved,” Adi Imsirovic, senior research fellow at The Oxford Institute for Energy Studies, told CNBC’s “Squawk Box Europe” on Tuesday.
According to Imsirovic, the EU’s decision sets the door for the EU and the US to increase pressure on other energy-importing countries, such as India, to impose similar sanctions on Russian oil.
“Before it was impossible because it is very hard to ask India, for example, to drop their imports if Europe itself is not doing it. So, I think this is very important from the political point of view,” he said.
According to Reuters, using Refinitiv Eikon data, India, the world’s third-largest oil importer, has seen its crude imports from Russia steadily rise since Russia invaded Ukraine in late February.
The third-largest economy in Asia has rebuffed criticism of its continued purchases of Russian energy in the aftermath of the Kremlin’s war in Ukraine, claiming that a sudden halt in Russian oil imports would ultimately harm its customers.
Separately, China has been secretly increasing its imports of Russian oil at lower prices, according to Reuters, citing shipping statistics and anonymous oil dealers. It appears to show the world’s largest crude importer filling the void left by Western purchasers cutting connections with Russia over the humanitarian catastrophe in Ukraine.
(Adapted from CNBC.com)