Chronicle of raw materials
The challenges of the European embargo on Russian oil
Audio 01:42
An oil refinery in Tartarstan, Russia.
© REUTERS/Sergei Karpukhin
By: Marie-Pierre Olphand Follow
2 mins
It is still only a proposal, but Europe could within six months stop importing Russian oil.
How and with what consequences?
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Even if the European countries are preparing for it, the application of a possible embargo is synonymous with multiple challenges, because Europe was historically the natural outlet for Russian hydrocarbons.
In 2021, Russia supplied Europeans with 30% of their crude oil needs and 15% of their refined product consumption, we are talking in particular about diesel, the supply of which looks tight in some countries.
TotalEnergies is already planning to import it from its refinery in Saudi Arabia.
For crude, prioritizing new origins means rethinking shipping methods.
And therefore face a logistical difficulty, especially for the refineries located in the center of Europe which were supplied directly from Russia by pipeline, such as that of Leuna in Germany.
It will also take the time to adapt refineries to process oil other than Russian, with different viscosity characteristics, for example.
► To read also: Oil: can Russian barrels be replaced?
An inevitable impact on prices
On the market, mechanically, prices should rise if the embargo is confirmed, explains Patrice Geoffron, professor of economics at Dauphine University.
Especially if this Thursday, during their monthly meeting, the OPEC countries and their allies decide not to accelerate their production rate.
The European embargo could also reinforce the existence of two markets, explains the expert: the Russian market and the non-Russian market.
On the first, oil is already selling at a discount of 20 to 25% to Indian buyers - India has thus bought twice as much Russian oil since the start of the war in Ukraine as in the whole of 2021. the second market, the price will go up and difficult to say how far.
The forecasts of certain experts foresee a crude that would pierce the ceiling of 150 dollars per barrel, or even, for 300 dollars if we are to believe the threat of soaring prices announced by the Russian Deputy Prime Minister, in charge of Energy.
Will European countries show solidarity?
Between the intentions and the implementation of the European embargo, there are still many gray areas to be clarified.
How will the missing volumes be distributed?
To what degree will the general principles of solidarity between European countries be applied?
Are group purchases planned?
Points that will have to be clarified quickly if Europe wants to convince the most reluctant of its members.
For now, countries are prospecting individually to diversify their supply.
Germany notably announced that it had reduced its dependence on Russian oil from around 33% before the start of the war to 12%.
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