Germany is upping the ante in its confrontation with Russia, saying that it will end Russian oil imports by the end of the year, whether or not the EU agrees to a total embargo.
The government in Berlin is already negotiating with alternative oil suppliers, Bloomberg reported, citing officials who declined to be named, and it is confident that the next six to seven months will be enough to solve the logistical problems surrounding such a complete switch of suppliers.
The European Union has been discussing an oil embargo on Russia as part of its sixth sanction package, but it has been unable to convince all member states to vote for an embargo. Hungary and Slovakia got extensions until 2024 to replace their suppliers of oil, but Hungary is still against an embargo. Bulgaria has threatened to veto the embargo unless it receives an exemption, too.
The rest of the European countries will have a grace period of six months to wind down their oil purchases from Russia and replace them with imports from elsewhere. For oil products, the proposed grace period is eight months.
If an embargo is agreed upon by the EU members, Russia's oil production could drop to 9.6 million barrels daily, according to estimates made by the International Energy Agency. This would be the lowest since 2004 and would happen at a time when the global oil supply continues to be tight amid rising demand, despite lockdowns in China.
Germany had signaled before that it was ready to ditch Russian oil as well as Russian gas. Last month, Economy Minister Robert Habeck said that Germany could stop importing Russian oil by the end of the summer. Later, he reported that the share of Russian oil in Germany's total imports had declined from 35 percent before the start of the war in Ukraine to just 12 percent. The new oil suppliers have not been named.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
Moreover, an embargo isn’t a foregone conclusion with Hungary still opposed to it.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London