Could the European embargo on Russian oil be a bad idea?

This is the question raised by the Center for Prospective Studies and International Information (Cepii), an organization attached to Matignon, in a note published on Wednesday.

If Europe turns away from Russian oil in reaction to the war in Ukraine, “it will be necessary to replace a little more than a quarter of the total imports” of black gold from the continent, recalls Cepii in the first place.

However, this implies diversifying European hydrocarbon supplies, for example by turning to Saudi Arabia, Brazil, the United States or Canada.

But these major oil powers are geographically further from Europe than Russia and the diversification of European supplies will therefore result in higher transport costs, warn the authors of the note.

Broken price and good quality oil

In addition, these new suppliers should increase their production to meet the demands of the European market.

But convincing them would be trickier than it seems.

Indeed, Russia signed a contract in mid-March with Indian companies for oil at a discounted price of 25 dollars a barrel.

"The signal transmitted by Russia is that it will not hesitate to cut prices if they were to increase their production" to satisfy European desires for diversification, analyze the researchers.

Finally, “it is important to consider the quality of the crude oils” that Europe could import in the future.

"Russian oil having good qualities for producing middle distillates (diesel), replacing it with another oil could require more complex treatment in the refinery to obtain the same finished products", points out Cepii.

"The price of petroleum products should therefore increase under the effect of these technical constraints, independently of the game of supply and demand," he concludes.

Why reconsider the advisability of an embargo on Russian oil, the subject of discussions within the European Union?

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War in Ukraine: Three months of conflict already, imbroglio in the EU over the Russian oil embargo

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  • War in Ukraine

  • Russia

  • Oil

  • Embargo

  • European Union (EU)