The EU finally reached an agreement — albeit a watered-down one — on banning Russian oil imports. The ban has been a long time coming - and it will be a long time coming still as the ban won't go into full effect until the end of the year.
But that won't stop oil prices from reacting to the ban.
The ban, of course, is designed to punish Putin by choking off Russia's oil revenues. But the West may be shocked to learn that what it has accomplished - at least in the short term - is its own misery in the form of higher crude prices.
Russia, like other major crude oil producers this year, has benefited handsomely from crude oil sales since the huge price spike that began last Fall. For Russia, the timing couldn't have been more perfect. Those oil revenues are helping to fund its war in Ukraine. This unfortunate scenario is precisely what has prompted the EU to try to arrange some monetary punishment by refusing to purchase the international pariah's crude oil. But the ramifications will go well beyond Russia into the very countries that are seeking to choke off Russia's war funds - even into America.
Russia exports nearly 8 million bpd of crude oil and condensate - 2.3 million bpd of which makes its way into the EU. Of that 2.3 million bpd, 1.6 million bpd is shipping to the EU by sea. This is the first type of crude that will be banned. The rest of the crude that makes its way from Russia to the EU is shipped via pipeline,…