“There are no budget losses”: why Moscow announced an increase in profits from Russian oil exports after EU sanctions

Moscow has alternative sales markets for the supply of Russian oil, and the Russian Federation is already increasing sales on them, Russian Foreign Minister Sergei Lavrov said in an interview with the Radio and Television of the Republika Srpska television and radio company.

So the head of Russian diplomacy commented on the introduction by the European Union of restrictions on the import of black gold from the Russian Federation, which provides for the sixth package of anti-Russian sanctions.

“Oil, by and large, is not subject to politics, there is a demand for it.

Oil markets do not follow political "orders", "whims".

We have alternative sales markets, where we are already increasing sales.

Considering the level of prices that has been established as a result of the policy of the West, we do not have any budget losses.

On the contrary, this year we will significantly increase the profit received from the export of our energy resources,” Lavrov said. 

The EU adopted a decision on the next restrictions this week, banning the purchase, import or transfer of crude oil and some petroleum products from Russia to the EU countries.

To abandon crude oil, the EU has set itself a deadline of six months, and of refined products - eight.

At the same time, temporary exceptions are provided for member countries of the European Union, which, due to their geographical location, are particularly dependent on such supplies from the Russian Federation.

In particular, Bulgaria and Croatia will have exemptions for offshore imports of Russian oil and vacuum gas oil.

Meanwhile, as Lavrov noted, against the backdrop of anti-Russian sanctions in Europe, the standard of living is deteriorating, inflation is rising and growth is slowing down.

“There was even the concept of “new poor”.

People are suffering from upcoming problems, including rising prices.

Many are in danger of poverty,” said the Russian foreign minister.

Earlier, the head of the Brueghel Research Center in Brussels, Guntram Wolf, said in a commentary to Der Spiegel that the EU countries may face a price shock when implementing a phased reduction in Russian oil imports.

He did not rule out that the decision to abandon black gold from the Russian Federation would be the worst possible scenario for the EU, as European businesses and consumers would suffer from high and likely to continue to increase oil prices.

“Europeans are in for hard times,” Wolf said.

“Inflationary pressures will persist.”

At the same time, the head of the Brueghel Research Center also expects a “significant loss in purchasing power” of the EU population.

"There will be a big deficit"

Recall that shortly before the final approval of the sixth package of EU sanctions against Russia, the New York Times published an article stating that Western leaders hope to force Russian oil producers to close wells by their actions, but “these efforts are risky and may fail.”

• EU flags

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• © Alberto Pezzali/NurPhoto

“In the event of a significant increase in oil prices, Russia’s total revenues from its sale may not fall so much,” said NYT correspondent Clifford Krauss.

At the same time, in his opinion, due to energy purchases from alternative suppliers, and not from Russia, Europe, the United States and much of the rest of the world "there is a possibility of suffering damage" because oil prices, which have been rising for several months , may increase even more. 

“European companies will have to look around the world for grades of oil that their refineries can process as easily as Russian oil.

In the future, there may occasionally be a shortage of certain types of fuel, for example, diesel, (security.

) which is extremely important for trucks and agricultural machinery, ”Krauss emphasizes.

Russian Deputy Prime Minister Alexander Novak also warned about the negative consequences for the EU due to its restrictions on the import of Russian oil in an interview with the Rossiya 24 TV channel.

According to him, this decision of the European Union is more political than economic, because it will primarily affect EU consumers.

“We see an increase in prices not only for oil, but also for oil products.

I do not rule out that there will be a large shortage of petroleum products in the European Union,” Novak predicted.

"Won't affect earnings"

As Sergei Pravosudov, director of the National Energy Institute, noted, as the embargo on Russian oil among EU countries expanded, Russia began to more actively redirect supplies of its black gold to alternative markets.

“As soon as Europe started talking about reducing the volume of Russian oil imports, problems immediately began with the insurance of such cargoes in European ports.

Because of this, the intensity of oil supplies from the Russian Federation to the EU began to decline even before the introduction of the sixth package of sanctions.

At the same time, Russia began to increase supplies to Asia: first of all, this is India, and China is in second place, ”the expert said in an interview with RT.

According to Pravosudov, if the EU continues its policy of expanding the embargo on Russian oil, this will lead to even more significant redistribution of the market and a serious increase in prices for this type of energy resource for European consumers.

• Tankers with Russian oil

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• © Vitaliy Timkiv

“EU countries, which are now banned from buying oil from Russia, will be forced to look for other suppliers, offer them higher prices for it and lose money.

This situation will lead to a lack of supply and an increase in prices not only for oil in Europe, but also for its derivatives, as well as for many other goods.

Russian black gold will continue to flow to Asian markets,” the analyst said.

At the same time, Pravosudov also allowed the option of increasing the number of gray schemes related to the illegal import of Russian oil to the EU countries.

“We are talking about cases when oil from the Russian Federation is mixed with some other grades, and then it is announced that it is no longer from Russia and therefore much more expensive.

This will also lead to higher product costs and consumer dissatisfaction,” the expert explained.

Pravosudov recalled that exemptions from sanctions would apply primarily to Hungary, the Czech Republic and Slovakia, since these states are most dependent on Russian energy supplies.

“The EU makes exceptions for those states for whom it is simply impossible to replace oil supplies from the Russian Federation: a hydrocarbon mixture from Russia with its own density, a certain amount of sulfur.

If these countries were not allowed to buy oil from the Russian Federation, their factories would simply stop, ”the analyst stated.

At the same time, according to an industrial expert, Doctor of Economics Leonid Khazanov, Europe will not be able to quickly find a replacement for Russian oil.

“To do this, they need not only to increase oil purchases in Africa or the Middle East, but also to rebuild their oil refineries, which are focused specifically on Russian fuel, since they were created specifically for it.

And this is not only costly, but also requires a lot of time - such perturbations can take several years.

As a result, the actions of the European Union will lead to a shortage of oil and its derivatives in the EU, ”the analyst said in a conversation with RT.

• Druzhba oil pipeline

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Khazanov also explained why India and China are now the leading alternative markets for Russian black gold.

“These two countries have recently greatly increased their oil purchases.

And, apparently, they will continue to increase them further, since now the market conditions are developing in such a way that the Indians and Chinese are striving to buy more fuel before it rises even more expensive, ”the expert said.

In addition, Russia may increase oil supplies to other markets, in particular to Bangladesh, Thailand, Indonesia, Khazanov believes.

“There is also a fairly high demand for this energy resource.

In addition, under the EU sanctions, the Russian Federation may even reduce oil production, despite the fact that this will not affect the income of our country in any way, since such a measure will lead to an increase in the cost of oil on the world market.

This will compensate for the losses of the Russian Federation from the reduction in production and at the same time hit the fuel markets of both the European Union and the entire West, ”concluded the analyst.