With its sixth package of sanctions against Russia, the EU is targeting the oil sector. A gradual ban on imports of crude oil and oil products is planned by the end of the year, said EU Commission President Ursula von der Leyen on Wednesday. However, the new support for Ukraine could be expensive for consumers and the German economy. A overview:
What exactly is the EU Commission proposing?
Specifically, according to the EU Commission, it is planned that after a phase-out phase of six to eight months, an import ban on crude oil will apply and that no more oil products will be imported by the end of the year. According to information from the German Press Agency, far-reaching exemptions are only planned for Hungary and Slovakia. These two EU countries are currently still covering a large part of their oil requirements from Russia and, due to the lack of access to the sea, do not see themselves in a position to quickly develop other sources of supply.
The permanent representatives of the EU states in Brussels are now discussing the Commission’s proposals. If there are no more major objections from the capitals, the embargo could then be decided in the coming days together with other new Russia sanctions.
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What could this mean for German consumers?
Robert Habeck (Greens) expects high “price jumps”. The embargo means “higher inflation, higher energy prices and a burden on the economy,” said the Federal Minister of Economics (Greens) on Monday in Brussels.
The prospect of the planned import ban alone caused prices at the petrol pumps to rise in April. One of the reasons is that Russian oil must be replaced by probably more expensive alternatives from other countries. In addition, the conversion of refineries and delivery routes means effort and costs. But hardly anyone dares to predict when and to what extent refueling or heating will become more expensive.
The petroleum trade association Fuels and Energy is very vague: it is “rather unlikely” that there will be no impact on prices at gas stations. However, the market and price development depend on many factors, including the dollar exchange rate and the decisions of the major producing countries.
The Federation of Consumer Organizations takes a similar view. “No one can reliably predict how prices will develop after an oil embargo decision,” says vzbv mobility expert Marion Jungbluth of the German Press Agency. “The oil market has always been sensitive and prices volatile.”
What can be done against the price increase?
The consumer advice center warns the federal government to keep a close eye on the prices at the pump. You have to intervene if corporations want to enrich themselves in the crisis, says Jungbluth with a view to possible profits from sudden changes in the market situation (windfall profits).
The market transparency office for fuels and the Federal Cartel Office are required. “The energy tax cut that was passed on June 1, 2022 must be passed on to consumers on a one-to-one basis,” the expert demands.
A price moratorium should also prevent tickets for buses and trains from becoming more expensive. Saving energy is also important. At the same time, Jungbluth warns: “Hamster purchases would unnecessarily increase the price or even lead to a shortage, so we advise against it.”
[Lesen Sie auch: Öl-Embargo gegen Russland – das wären die Folgen (T+)]
What could the embargo mean for the German economy?
The tremors are mainly in Schwedt in Brandenburg. There is the PCK refinery operated by the Russian state-owned company Rosneft, which has so far been dependent on Russian oil supplies. 1200 people are employed directly in the factory, as well as hundreds of employees at suppliers and service providers on the site.
How dependent is Germany on Russian oil?
Germany now sees itself reasonably well prepared. Without Russian deliveries, no “oil crisis” is to be expected, Habeck recently said. According to him, the share of Russian oil in German consumption has fallen from 35 to 12 percent within a few weeks. The remaining share of Russian oil of twelve percent is therefore attributable to Schwedt.
How could the sanctions affect Russia?
Proponents hope the consequences will be serious. At the beginning of the year, Russia was still exporting half of its daily almost five million barrels of crude oil to Europe. Half of the three million barrels of oil products, i.e. diesel or heavy oil, also went west.
The oil that has so far flowed through the Druzhba pipeline – about 750,000 barrels per day – is unlikely to be completely diverted to other countries, even with expensive ship transport. The only pipeline to the east is busy anyway.
Oil production fell by nine percent in April. Finance Minister Anton Siluanov expects a decline of 17 percent by the end of the year. Further losses could be painful, as oil revenues account for around 30 percent of Russia’s budget. So far, Moscow has been able to bear the losses.
The EU’s oil embargo could initially have a counterproductive effect, as the Brussels economic think tank Bruegel emphasizes. “Paradoxically, such an embargo could even result in a gain for Russia, at least in the short term, and a loss for the EU and the global economy as a whole,” says a recent Bruegel statement.
Because in the months-long transitional period before the import ban comes into force, the prices for Russian oil are likely to rise significantly. The EU countries would have to pay more for their supplies, and Russia would have more money in the war chest against Ukraine for the time being.
US Treasury Secretary Janet Yellen had also warned of such an effect on Europe and the global economy. According to the Bruegel experts, punitive tariffs on Russian oil exports would have made more sense than an oil embargo.
[Alle aktuellen Entwicklungen im Ukraine-Krieg können Sie hier in unserem Newsblog verfolgen.]
What consequences would the embargo have for developing and emerging countries?
However, the oil embargo is likely to have the most severe consequences for developing and emerging countries. Habeck warned that such countries could then accuse Europe and the United States of driving up prices and increasing poverty in the world with their oil embargoes.
Russian President Vladimir Putin could then tie such countries to himself with a “discount” on oil. Therefore, an energy embargo must be “well embedded in an overall political strategy that ultimately weakens Russia and does not accidentally cause worse things,” warned Habeck.
How could Russia react to the new sanctions?
The EU is also concerned that Russia could respond to the sixth sanctions package with new retaliatory measures. A stop in gas deliveries would have the most significant impact. Last week, Russia had already turned off the gas supply to Poland and Bulgaria. Germany must also expect such a step, warned Habeck. EU Energy Commissioner Kadri Simson stressed that any Member State could be next.
For such a case, the European Union has so far taken only insufficient precautions. The so-called SoS regulation (short for “Security of Supply”) from 2017 provides for help between the member states in an emergency. According to reports, Germany has only concluded corresponding agreements with Denmark and the Czech Republic. However, the regulation would give the German authorities the option of shutting down branches of industry in extreme cases. (AFP, dpa)
