Experts do not expect major consequences of the oil embargo for Europe for the time being, but Russia could well lose 25 percent of its exports.
The EU’s oil embargo against Moscow consists of two parts: on the one hand, Russian oil can no longer be imported into the EU by ship. On the other hand, a price ceiling of 60 dollars (about 57 euros) per barrel applies to all exports worldwide.
That should hit Putin’s main source of income. Because energy exports, which generated about $150 billion in the first six months alone, are financing the war against Ukraine. The Kremlin therefore confirmed its rejection of the price cap on Monday and announced countermeasures. What that might be, however, remained unclear.
Billions for the war economy are missing
According to some experts, the EU ban will mean that about 25 percent less oil can be exported, meaning that many billions are missing for the war economy in the long term.
As for the price cap, a lot will depend on how the big buyers China, India and Turkey react. Josef Baumgartner of the Economic Research Institute (Wifo) currently does not expect major effects on the markets. The weakening economy, particularly in China, has led to falling oil prices in recent weeks. Russian Ural oil has been trading at a discount of 20 to 30 percent to North Sea oil (Brent) since the start of the war. Yesterday the price of oil from the Urals fell to $63, just above the “EU limit”. Brent, on the other hand, rose towards $87.
Baumgartner on the “Krone”: “The question is whether OPEC will continue to cut production volumes in order to raise the price again.” After that, we’ll see if the $60 limit works. Austria hardly imports Russian oil, but a lot comes from Kazakhstan via a Russian pipeline.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
