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Updated June 3rd, 2022 at 09:29 IST

Moscow says EU-led Russian oil embargo may hurt European consumers more than Putin

On the 100th day of the Russian war, Moscow said that Brussels' decision to slash oil imports from Russia will only hurt European consumers more than Russia.

Reported by: Dipaneeta Das
Russia
IMAGE: AP | Image:self
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On the 100th day of the all-out Russian war in Ukraine, Moscow said that Brussels' decision to slash oil imports from Russia will only hurt European consumers more than Russia. While the European Union-led embargo is aimed at cutting off the Kremlin's biggest source of war funds, Russian Deputy Prime Minister Alexander Novak, in his televised remarks, highlighted that the partial ban will lead to a "big deficit" of oil products in European markets. According to analysts, the ban is expected to reduce Russian oil imports by roughly 1.5 million barrels per day, resulting in a counterproductive impact in short term.

The sudden shift from cheaper crude to Brent is also expected to shoot up the already high prices, Brussels-based analyst Bruegel said, as quoted by Politico. "Russian oil sales to the EU will continue for many months to come, this could very well increase Russia's profits," given the sky-high oil prices, they said. The revenue will also boost Kremlin's budget for the war even though for the short-term, the report added. An analyst at the ISPI think tank in Milan is also worried that the Europea might "lose the bet." Speaking to Associated Press, he said the embargo could backfire if "Russia starts to earn more."

Nevertheless, the ban will substantially shrink Moscow's most lucrative source of income which experts say is funding Russian President Vladimir Putin's "war machine." The embargo will condense at least $110 billion in revenue from oil exports for Russia, which is about one-fifth of the total from commodity proceeds. "We do not view the issue as done by expecting continuing efforts from the US and European countries to reduce Russian oil revenue from other parts of the world," Height Security analyst Benjamin Salisbury said in his report, as quoted by CBS news.

EU finalised 75% cut off on oil imports from Russia

As informed by a tweet by European Council President Charles Michel, all members of the 27-nation finally came to terms with the sixth package of sanctions against Russia. The list of bans includes a 75% ban on Russian oil imports immediately, followed by a 90% ban by the end of the year. The package was finalized after month-long opposition from Turkey and Hungary, two close allies of Russia. As a solution, the EU has allowed a substantive 10% exemption for pipeline imports upon which they can rely.

The sanctions on Russian Federation will help "reduce Russia's capacity to finance its war," said EU President Ursula Von der Leyen. The package banned three more Russian state-backed media from broadcasting on EU cable and internet networks. Further Russia's largest investment bank Sberbank was also removed from the Society of Worldwide Interbank Financial Telecommunication (SWIFT) services. However, Putin's loyalist, Patriarch Kirill of the Russian Orthodox Church was left out of the newly imposed sanctions.

(Image: AP)

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Published June 3rd, 2022 at 09:29 IST

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