Now all Russian oil is banned in the EU

Russia's invasion of Ukraine  

Now all Russian oil is banned in the EU  

Of:  

Alexander Bönke  

Published: Less than 2 hours ago  

Updated: Less than 2 hours ago  

NEWS  

Today, all imports of refined Russian oil products into the EU are prohibited.  

Now the world market is getting ready for more chaos. 

But there is a loophole.  

As of today, Sunday, all imports of refined oil from Russia to the EU are banned. This means that basically everything produced from Russian crude oil disappears. 

– Gasoline for the car, jet fuel that goes into an airplane or diesel that goes into trucks and machinery. So it's really the fuel that we're actually consuming that's keeping the economy going, Richard Bronze, head of geopolitics at the London-based consultancy Energy Aspects, told NPR. 

The headache of the world market  

Last year, roughly half of the EU's imports of diesel came from Russia, equivalent to 700,000 barrels per day. You will have to find that elsewhere. 

- Europe will have to turn to other markets to cover the Russian loss. It is above all about suppliers in Asia and the Middle East, says Jessica Alenius, CEO of Drivkraft Sweden, the industry organization for the fuel and propellant industry.  

Russia wants new buyers 

Just as the EU needs to find new places to import from, Russia needs to find new buyers. The import ban only applies to the EU as well as Great Britain and the USA, which already have bans in the past. 

- It could be in East Africa, Asia or Latin America. "What we're seeing is one big reshuffle to get desirable barrels to Europe and unwanted barrels from Russia to other markets," Hedi Grati, head of refining at S&P Global Commodity Insights told NPR. 

All Russian oil is banned in the EU. Photo: Michael Probst/AP 

EU chief Ursula von der Leyen. Photo: Efrem Lukatsky / AP  

The loophole  

But Russia starting to export more to other markets could open up a loophole. It is in the country where the refining takes place that becomes the new country of origin. So if Russia exports crude oil to India and they then refine it into diesel, it is suddenly legal to import into the EU. Whether the loophole is intentional or not is the question. 

- I think it is a conscious part of the design. The US and its allies want to ensure that products continue to flow to global markets to avoid price spikes, says Richard Bronze. 

Risk of higher prices in Sweden  

According to Jessica Alenius, the price of diesel in particular may rise for Swedish consumers in the future. 

- It won't have much significance for the supply. The diesel we buy comes mainly from Swedish refineries and from the rest of the Nordic region. However, the price may be affected. Diesel is a global product traded on a global market. An already tight global supply of diesel can become even tighter and then the price increases.  

In addition, rising transport prices can cause the price to drift further. 

- When we have to transport diesel from Asia and the Middle East, it will be a longer distance. Then the costs of getting it to Europe increase. It can also affect the price.  

The recession can help motorists 

But there is a potential glimmer of light. The impending recession may mean that the price increase will not be so dangerous. 

- In general, we have had a very jerky market since the war began. The fact that Europe is now approaching a recession dampens the pressure on transport and then we get less pressure on diesel as well. That is why it is difficult to say that the sanctions will lead to higher prices. There are so many other things that influence.  

Vladimir Putin. Photo: Mikhail Klimentyev / AP