The EU is pushing back against accusations that its sweeping ban on Russian oil is hiking global prices and injecting further disruption into an already unpredictable energy market.
“That’s completely false,” said Josep Borrell, the EU’s foreign policy chief.
“The price of oil started increasing one month before the war, it was caused by the war. It has peaked since the beginning of the war,” he added. “And since we adopted sanctions, and since we banned the oil exports from Russia, the price of oil has decreased.”
While Borrell’s assessment is factually true – the benchmark price of Brent crude has fallen to around $106 per barrel compared to its peak of $123 in early March –, it paints an incomplete picture.
The oil ban agreed by member states in late May was designed as a gradual and structured measure: seaborne imports of Russian oil, both crude and refined products, will be phased out by the end of the year.
Hungary and other landlocked countries secured an indefinite exemption for pipeline imports.
The sanctions also included a prohibition to insure and finance the transport of Russian oil to non-EU countries, a sector in which the bloc enjoys a comfortable dominance. Obtaining high-grade insurance to cover potential liabilities is essential for oil tankers that carry oil around the world.
Overall, the EU has committed to do away with over 90% of its oil imports from Russia.
Pre-war figures indicate the bloc used to buy about 2.2 million barrels of crude oil, together with 1.2 million barrels of refined products, from Russia on a daily basis.
The ban, once completed, could remove up to 3 million oil barrels from the international markets. This would lead to a substantial re-adjustment of the supply-and-demand balance and could drastically push prices up if Russia fails to find new clients to sell all those barrels.
China and India are already boosting their purchases of Russian oil, which the Kremlin is offering with an attractive $30 discount, much to frustration of Western allies.
In a bid to prevent further market disruption, the United States is leading the cause to introduce a price cap on Russian oil. The idea was born out of the last G7 meeting but Washington is keen …….