The propaganda effect of this is huge, the EU has announced, in an emergency session, a ban on Russian Oil.
But not really. They have agreed to ban the import of Russian oil that comes in by sea, which is about 2/3 of their oil. They will not ban what comes through the pipelines.
Next, they say they “effectively cut around 90% of oil imports from Russia to the EU by the end of the year.”
OK, so they are banning Russian oil to remove funding for the war in Ukraine, but they won’t do it until the end of the year, which is likely to be long after the war is over. And of course, when the war is over they don’t have to do it anymore.
Europe imports about 2.4 million barrels of oil from Russia per day, which is valued at $288 million per day. Cutting either 2/3 or 90% (depending on who you believe) would indeed be a substantial hit to Russia’s cash flow.
But I’m calling b&^s&t on this.
First of all, Europe will have to replace about 1.6 million barrels of oil per day.
Where will this come from? The U.S. doesn’t have it, Joe Biden has been steadily cutting our oil production. Saudi Arabia has declined to participate. They are happy with the new prices and a want a stable market at the new price. More production on their part would bring the price down.
Hopefully, Biden isn’t stupid enough to make deals with Venezuela or Iran. That would collapse any chance of reform in those countries.
If this does indeed happen, PB contributor George McMillan suggests that this will become a simple “laundering” scheme. That Russian oil will arrive at some intermediate location, and Europe will simply buy it from there.
And by the way, you don’t see them banning Russian natural gas yet, which is far more important to them.
As you can see in the chart below, the European Union countries average 57% dependence on outside sources. A real, actual ban on Russian energy would cripple the EU, shut down their major industries and have people freezing come next Fall and Winter.
Bottom line, the EU has written a check that will likely never have to be cashed, and that will likely bounce if they try.
I realize the EU has to appease the protesters and keep the appearances up on supporting Ukraine, but I find their posturing and propaganda plays distastefully.