On Tuesday, May 31, world oil prices reached their highest level over the past two and a half months.
In the course of trading on the ICE exchange in London, the cost of the July contract for the supply of Brent raw materials rose by 2% and for the first time since March 9 reached $124.1 per barrel.
Quotes began to grow against the backdrop of statements by the European authorities - on the night of May 31, the EU countries, after almost a month of discussions, were able to agree on a new package of anti-Russian sanctions.
Restrictions imply, among other things, the introduction of a partial embargo on oil supplies from the Russian Federation to Europe.
“The European Council has agreed on the sixth package of sanctions.
It will establish a ban on the import of oil from Russia.
These sanctions will immediately affect 75% of Russian oil imports.
And by the end of the year, 90% of Russian oil imported to Europe will be banned, ”said the head of the European Council, Charles Michel, on Twitter.
Note that the EU leadership announced plans to introduce another package of measures against Moscow back in early May.
However, for a long time, the countries of the union failed to achieve unity regarding the ban on Russian oil supplies.
One of the main opponents of the introduction of the raw material embargo was the Hungarian government.
As Prime Minister Viktor Orban said earlier, restrictions against Moscow in the energy sector are tantamount to an “atomic bomb” for the economy of the republic.
“I was ready to agree with the first five packages of sanctions, but from the very beginning I made it clear that there is a red line - this is energy,” the Hungarian prime minister noted.
As a result, the European authorities have decided to extend the embargo for Hungary, as well as for several other EU countries.
The approved ban on the import of raw materials from the Russian Federation will affect only sea supplies, while the pumping of Russian oil through pipelines to Europe will continue.
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However, experts interviewed by RT do not yet expect a serious reduction in oil exports from Russia to the EU.
Nikolai Vavilov, a specialist in the strategic research department at Total Research, explained that today Moscow remains the largest energy supplier to the EU, and the countries of the region do not have the opportunity to quickly replace Russian raw materials.
According to the latest data from Eurostat, in 2020 Russia provided 37% of the EU's oil needs.
At that time, the most active raw materials were purchased from Moscow by Germany (34% of supplies came from the Russian Federation), the Czech Republic (49%), Hungary (61%), Poland (72%), Lithuania (73%), Finland (84%) and Slovakia (100%).
Against this background, European countries will soon begin to look for workarounds for the purchase of Russian oil, Vavilov believes.
Moreover, according to the expert, the import of raw materials will now be more expensive for the EU states.
“Exceptions for pipeline oil were made for a reason.
It will still be supplied to Europe, but probably in larger volumes.
At the same time, no one has canceled the so-called blending: that is, our Urals oil will be mixed with another grade and resold no longer as Russian, but as (conditionally) Estonian.
In other words, Moscow will continue to quietly supply oil to Europe, since the European Union simply cannot globally replace those 90% of imports, ”the expert explained.
A similar position was previously voiced by OPEC Secretary General Mohammed Barkindo.
According to him, today there are no free capacities in the world to replace energy raw materials from Russia, so other large hydrocarbon producers will not be able to quickly take the place of Moscow and provide the European market in the required volumes.
“Obviously, the export of Russian oil and oil products in the amount of more than 7 million barrels per day cannot come from somewhere else: there is simply no free capacity.
Its potential loss due to sanctions or voluntary restrictions will definitely be felt by the energy market,” Barkindo said.
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The price of failure
As Natalya Milchakova, a leading analyst at Freedom Finance, suggested in a conversation with RT, as a result of EU sanctions, a barrel of Brent oil could rise in price to a record $150-160.
According to Nikolai Vavilov, such dynamics risks turning into an even more tangible increase in fuel prices and a rise in the price of a number of other goods in the region.
According to preliminary estimates by Eurostat, in May, the annual inflation rate in the euro area has already accelerated to 8.1% - the highest level on record.
Meanwhile, UN economists consider the current situation a shock for the European economy and do not exclude the possibility of a recession in the region.
In general, against the background of the refusal to import hydrocarbons from Russia, Europe runs the risk of becoming the region with the highest cost of energy resources in the world for a long time, as President Vladimir Putin said earlier.
In his opinion, this state of affairs could seriously undermine the competitiveness of a significant part of European industry.
“Obviously, along with Russian energy resources, the possibility of increasing economic activity will also leave Europe for other regions of the world.
Such an economic auto-da-fé, suicide is, of course, an internal affair of European countries.
We must act pragmatically, proceed primarily from our own economic interests,” the head of state emphasized.
As Nikolai Vavilov noted, the embargo may come into force closer to mid-autumn, so the EU and Russia still have time to prepare.
Meanwhile, Moscow has already begun to actively deploy the infrastructure for energy supplies to the East.
And according to the assessment of the analytical company Kpler, in May, Asia for the first time surpassed Europe in terms of oil purchases from Russia, Bloomberg writes.
Note that Russian companies supply oil to Asian countries at a discount.
Nevertheless, even under these conditions, Russia has every opportunity to avoid serious losses from EU sanctions, Natalya Milchakova believes.
“Russia may lose part of its income due to the EU embargo, but compensate for them due to high prices and redirection of export flows to Asia.
The Ministry of Finance planned that by the end of 2022 Russia would receive 1 trillion rubles of additional oil and gas revenues, but taking into account the rise in prices for raw materials and the turn to the East, the amount would be at least 1.5 trillion rubles," Milchakova said.
System Shutdown
The new package of EU sanctions also includes measures against the Russian banking sector: the EU countries agreed to disconnect Sberbank from the SWIFT system.
However, the new restrictions will not lead to major changes in the bank's activities.
According to the press service of Sberbank, the organization continues to operate as usual.
“Basic restrictions are already in place.
Disconnecting from SWIFT does not change the current situation in international settlements.
Domestic transactions do not depend on SWIFT and will be carried out by the bank in the standard mode.
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Recall that the international interbank system SWIFT is designed to transmit financial messages.
In March, VTB, Rossiya, Otkritie, Novikombank, Promsvyazbank, Sovcombank and VEB.RF were already disconnected from the platform.
However, this did not affect the work of banks and customer service, Nikolai Vavilov noted.
“The decision to disconnect Sberbank from SWIFT would have been made in any case – if not now, then a little later.
Both Sberbank and the Russian financial departments have been ready for such a step for a long time, so the sanctions do not affect anything.
You don’t need to look far for examples: all Russian banks that are already disconnected from the system are quietly working as before - they accept deposits, issue loans, ”Vavilov explained.
According to the expert, certain difficulties may arise for companies involved in import and export.
After Sberbank is disconnected from SWIFT, such organizations will be forced to open accounts in other banks that have not been sanctioned.
“For example, it will be possible to use Gazprombank, which definitely should not fall under sanctions.
After all, all gas trade transactions go through this bank, and if it starts having problems because of the EU, then the region will simply be left without heating and electricity,” the expert explained.
In addition, the analyst recalled, an analogue of the SWIFT international payment system is already operating in Russia.
We are talking about the Financial Message Transmission System (SPFS) developed by the Central Bank.
The platform appeared back in 2014 and guarantees the uninterrupted transmission of payment orders within Russia and abroad.
“More and more countries and banks are gradually starting to connect to SPFS.
We also have a fast payment system that allows you to easily transfer money from a bank disconnected from SWIFT to another, after which funds can be transferred abroad.
There are other payment systems that also make it possible to transfer money to the countries of Central Asia, if we are talking about labor migrants.
That is, here, as such, there should be no problems with translations, ”Vavilov added.