EU halts Russian oil shipments

Today, Monday, the European Union announced a ban on the import of Russian oil by sea. This measure is part of the sixth set of sanctions directed against Moscow. The ban on shipments by tankers does not apply to oil transported through the Druzhba pipeline, whose branches pass through Russia, Ukraine and Belarus and serves Central and Eastern Europe.

Hungary, Slovakia and the Czech Republic, which are landlocked countries, rely heavily on deliveries from the Druzhba pipeline. Hungary, for example, gets 65 percent of its oil from this pipeline and has refused to agree to the blanket ban demanded by other EU countries.

About two-thirds of Russia’s oil supplies come from Europe by ship, but EU officials say that by the end of the year they will be able to block 90 percent of imports, after Germany and Poland pledged not to use the pipeline anymore. Bloomberg estimates that the ban will cost Russia $22 billion. Some Russian sources of this view. Others say its effect will be nil, as Moscow will find other buyers.

In the agreement reached at the European summit on May 30-31, no deadline was set for ending European purchases of Russian oil from the Druzhba pipeline. EU officials have made clear that they do not intend to stop at 90 per cent, that they are seeking a 100 per cent ban and will try to wrest it from Hungary, Slovakia and the Czech Republic in the coming months. Referring to the exemption granted to these three countries, European Commission President Ursula von der Leyen said on Monday: “This is something we will come back to and still have to work on.”

The ban, even if it has not yet been officially ratified, will intensify the financial pressure on Russia and cause prices to explode, in Europe and elsewhere. It is the working class that will bear the cost.

On the same day the oil embargo was announced, we learned that in May, inflation in Europe reached 8.1 percent, much higher than expected. In many countries, it is one and a half times higher than the continental average, as in Estonia (20 percent), Lithuania (18.5 percent), Latvia (16.4 percent) and Poland (13.9 percent). In the UK, it is expected to reach 10 per cent. Everywhere, food and fuel are the main drivers of increase.

Russian oil accounts for 30 percent of Europe’s total supply, and its removal has caused tension within the European Union. In Hungary, the conversion of refineries to handle non-Russian supplies would cost 500-700 million euros. Prime Minister Viktor Orban tried to assuage people’s fears in a video posted on Facebook, saying: “We succeeded in defeating the European Council proposal that would have denied Hungary the use of Russian oil.”

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