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If Europe were to ban crude oil and natural gas from Russia, it would be committing “economic suicide”, Russian President Vladimir Putin said on Tuesday.
Putin added that attempting to reduce energy supplies from Russia would harm Europe, not Russia, and would raise inflation and send high energy prices even higher.
Not only would such a move hurt Europe and not hurt Russia, but it would also actually add to Russia’s bottom line by increasing the price of crude oil that it exports, Putin said on Tuesday.
Since Russia invaded Ukraine, Europe has been looking for ways to punish Russia—without punishing itself. So far, Europe has yet to agree on any collective crude-oil-related sanctions, which would eat into Russia’s bottom line.
Germany, however, has said it would halt all Russian oil imports by the end of this year. Europe has so far agreed to exempt Hungary and Slovakia from any Russian oil embargo until 2024, but Hungary has so far refused to agree to an oil embargo.
The IEA estimates that a Russian oil embargo could push Russia’s crude oil production down to 9.6 million barrels per day. But as the days of negotiating wear on, it is looking less and less likely that an embargo will pass in Europe.
The United States on Tuesday is instead proposing a less painful solution to those countries wanting to disentangle itself from Russia. The U.S. has proposed a tariff on Russian oil instead of an embargo and will be formally suggested at the G7 finance summit later this week. The measure would in theory insulate Europe from any supply shocks, while restricting Russia’s oil revenues.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.