According to Russian Deputy Prime Minister Alexander Novak, once the full impact of the EU embargoes on Russian petroleum products is realized, Europe would find it challenging to replace Russian crude oil and product supply.
“In the past, Europe was a significant market for selling our oil products. We should wait and see what choices they ultimately make. We don’t yet know what might replace our fuel, Novak stated in an interview with the local news agency TASS that was released on Sunday.
The top Russian energy official said that some EU members might ask to be exempted from the ban on seaborne imports of Russian oil goods. Like oil, when the limitations did not apply to pipeline supplies, refineries in Bulgaria, the Czech Republic and Slovakia will likely turn to exemptions.
Even Germany and Poland, who have publicly rejected Russian oil, have applied for it for 2023, according to Novak, who TASS reported. The EU imposed an embargo on the seaborne imports of Russian crude oil on December 5. The blockade on the implications of Russian oil products will go into effect on February 5.
Although traders were concerned about a potential demand hit from slowing economies, the EU embargo and the EU-G7 price cap on Russian crude oil at $60 per barrel did not immediately cause turmoil in the oil market.
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However, there is growing uncertainty about how the bans on Russian imports will affect supply balances over the coming months.
The IEA stated in its monthly report in November that once the EU embargo on imports of Russian diesel takes effect, “the rivalry for non-Russian diesel barrels will be severe, with EU countries having to bid cargoes from the US, Middle East, and India away from their typical purchasers.”
According to the agency’s December data, despite a 430 kb/d decline in shipments to Europe, crude oil loadings were stable for the month at slightly over 5 mb/d. In contrast, product flows—particularly those of diesel—soared, even to Europe.