New sanctions against Moscow will apply from Sunday. In the future, the EU no longer wants to buy refined products such as diesel, petrol or lubricants from Russia – to make it more difficult for Russian President Vladimir Putin to finance his war of aggression. But Europe will also feel this step.
“From our point of view, the supply of fuel in Austria is assured,” explains Hedwig Doloszeski, director of the Austrian Association of the Mineral Oil Industry (FVMI). “However, we expect the situation in the European market, especially for diesel, to remain tense.”
According to the trade association, Austria itself obtained only small quantities directly from Russia before the war in Ukraine. Since April 2022, there has been no import of Russian petroleum products at all and no Russian petroleum is processed at the Schwechat refinery.
How dependent is Europe on Russian oil products?
Europe is considered an import market for diesel. “Due to the geopolitical situation and a lack of Russian quantities, less diesel is currently available on the European market,” says Doloszeski. According to figures from Eurostat, 30.9 million tons of diesel came from Russia to Europe in 2021, which corresponds to a market share of about ten percent. According to the German mineral oil association Fuels und Energie, replacements come from the US, Western Europe and the Arab world. For emergencies, there is a government fuel reserve for basically 90 days.
Is diesel more expensive at the pump?
It cannot be ruled out that diesel will become more expensive at the pump. However, experts such as the German energy economist Jens Südekum do not expect dramatic price increases. The embargo was announced well in advance, so the diesel warehouses are full.
As with the crude oil import ban, the EU wants to introduce a price cap for Russian petroleum products along with the new import restrictions. This means that, together with partners such as the US, it wants to force Russia to sell these substances below the market price to third countries.
Does the embargo really hurt Russia?
Experts expect the sanctions to cut Russia’s production of petroleum products — by 15 percent to about 230 million tons this year.However, no one is giving in in Russia penalty pain too. On the contrary, the leadership in Moscow emphasizes that oil on the world market is still mixing and that they are looking for other outlets – in India, for example. However, Russia must offer large price discounts, according to experts, about 30 percent compared to Western oils.
Is the EU embargo being observed?
According to research by The Economist, Russia has found ways to circumvent the oil embargo. This creates a gray market with its own shipping and insurance capacities, partly based on guarantees from the Russian state. Putin defended himself against the international crude oil price cap by ordering him to stop supplying countries that meet it from February 1.
Source: Krone
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