Buyers will have to pay more for oil or seek alternative supplies if the EU decides to impose import tariffs on Russia's oil, Kremlin Spokesman Dmitry Peskov said on Wednesday.
"Buyers of oil will have to pay more or look for alternative sources," Peskov told reporters in Moscow, as carried by Russian news agency TASS.
The idea of an EU tariff on oil imports from Russia comes from the United States, which is considering proposing that European countries impose a tariff instead of an embargo to allay concerns about the security of supply and surging oil prices, U.S. Treasury officials told Reuters earlier this week.
The U.S. is set to propose the tariff that would keep Russian oil on the market but limit the oil revenues for Putin, the Treasury officials told reporters.
The U.S. proposal is expected to be suggested at the G7 finance summit in Brussels later this week, as the EU is still struggling to find a common position on a phased-out embargo on Russian oil imports by the end of the year.
G7 members committed earlier this month to stop buying Russian oil, although they did not specify how and when this would happen. The U.S. banned imports of Russian energy products, including oil, LNG, and coal as early as the beginning of March. Europe, however, cannot afford to stop oil purchases from Russia outright, fearing a shortage of supply and record-high oil and other energy prices that could plunge most economies into a recession.
The EU could combine tariffs and embargoes, U.S. Treasury Secretary Janet Yellen said on Tuesday after discussing ways to reduce EU dependence on Russian energy with European Commission President Ursula von der Leyen.
"We're not trying to tell them what's in their best interest, but you know, we discussed some of the things that are under consideration," Secretary Yellen said, as carried by Reuters.
By Tsvetana Paraskova for Oilprice.com
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The latest American fad is for the EU to impose a tariff on oil imports from Russia instead of an embargo to allay concerns about the security of supply and surging oil prices. The U.S. is set to propose the tariff that would keep Russian oil on the market but limit Russian oil revenues.
It is a most ludicrous suggestion reminiscent of the IEA’s la-la-land net-aero emissions by 2050 roadmap.
The reason is that buyers will have to pay more for oil or seek alternative supplies. However, there are no alternative sources in the current tight market. Moreover, the global oil market is indivisible meaning that making Russian oil more expensive compared to alternative sources increases the tightness in the market and leads to rises in crude prices irrespective of where the oil originates.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London