BRUSSELS: The European Union’s landmark decision to prohibit practically all oil from Russia in retaliation for the country’s invasion of Ukraine might be a blow to Moscow’s economy, but its effects could also be blunted by rising energy prices and other countries willing to shop for a number of the petroleum, industry experts say.
Global organization leaders agreed late Monday to chop Russian oil imports by about 90% over the following six months, a dramatic move that was considered unthinkable just months ago. The 27-country bloc relies on Russia for 25% of its oil and 40% of its gas, and European countries that are even more heavily smitten by Russia had been especially reluctant to act. European heads of state hailed the choice as a watershed, but analysts were more circumspect.
The EU ban applies to any or all Russian oil delivered by sea. At Hungary’s insistence, it contains a short lived exemption for oil delivered by the Russian Druzhba pipeline to certain landlocked countries in Central Europe. In addition to retaining some European markets, Russia could sell a number of the oil previously absolute to Europe to China, India, and other customers in Asia, although it’ll should offer discounts, said Chris Weafer, CEO at consulting company Macro-Advisory.
“For the time being, Russia’s financial condition is not too severe due to high global pricing.” “The sanctions have one clear goal: to persuade Russia to end the war and withdraw its soldiers, as well as to consider a wise and fair settlement with Ukraine,” “Olaf Scholz, the German Chancellor, stated. Ukrainian President Volodymyr Zelenskyy said in a very video address that Ukraine is going to be pressing for more sanctions, adding that “The Free World and, by extension, the terrorist state should have no meaningful economic relations left.”” Matteo Villa, an analyst at the ISPI think factory in Milan, said Russia will take a reasonably significant hit now but cautioned that the move could eventually backfire. “The concern is that the price of oil will rise in general as a result of the EU sanctions. And if the value goes up lots, the danger is that Russia starts to earn more, and Europe loses the bet,” he said.
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