The sanctions the EU is trying to pose on Russia in the fuel sector have led to intense debates within the bloc. The matter that fast made its way onto the global agenda in recent weeks is causing EU bureaucracy to do overtime—even on the weekends.
Russia’s role in the fuel market
According to the latest data by the International Energy Agency (IEA) on the Russian energy sector, Russia is the world’s third-biggest crude oil producer, following the U.S., and Saudi Arabia. Russia’s crude oil production has reached 11.3 billion barrels per day. The U.S. and Saudi Arabia produced 17.6 billion barrels of crude oil per day, and 12 billion barrels per day, respectively, during the same period. However, Russia’s oil exports surpassed the U.S., which has high internal consumption, exporting 7.8 billion barrels of oil per day in December 2021. About 5 billion barrels per day of this amount consisted of crude oil and natural gas.
How will the EU replace Russian fuel?
The severity of the matter, which has long been challenging EU bureaucracy to such an extent is the fact that 60 percent of Russia’s oil exports are to OECD Europe. The EU’s crude oil imports from Russia are about 2.2 billion barrels per day on average, while its fuel imports are at 1.2 billion barrels per day. However, about 800,000 barrels per day of Russian crude oil export is made through Ukraine and Belarus to Poland and Germany in the north, and through the Druzhba pipeline to the Czech Republic, Hungary, and Croatia in the south.
This line also transports oil to the refineries in Central and Eastern Europe—so, in the event that the flow of crude oil is suspended, it will be impossible for refineries to replace the oil cut off at the same amount, same quality, and price. If Druzhba is no longer viable, this would mean that oil transmissions to Europe will be carried through tankers, and thus lead to increased costs. Hence, export costs will rise significantly. Let us note that oil prices are already soaring. Thus, Germany, whose oil consumption is high and gets its oil from Druzhba, is one of the main countries that will take a great blow because of this.
Sanctions on Russian oil deferred
As the oil sanctions on Russia were expected to be revealed last week, EU Commission President Ursula von der Leyen visited Hungary in an effort to persuade Prime Minister Victor Orban, who had the firmest stance in negotiations, to join in. Hungary demands a five-year exemption from the sanctions against Russian oil. Yet, its annual oil consumption is much humbler compared to Germany. The developments indicate that negotiations will continue for a while longer, and that the EU will spread across time the likely sanctions it will impose on Russian oil.
Meanwhile, EU sanctions will not only ban the purchase of Russian oil, but also aim to prevent EU countries’ involvement in the transport and sale of Russian oil to third countries, as well as the provision of insurance services for this purpose – in other words, their direct involvement in this trade. It is clear that this will negatively affect Greece, too.
The EU’s pesky pest: Greece
As much as 26 percent of the tankers carrying oil in seas belong to Greece, with Athens earning a pretty penny from the oil transport sector. Furthermore, a great portion of this income is processed in countless Russian banks it opened in the Greek Cypriot Administration of Cyprus (GCAC). The GCAC’s greatest fear is that the Russian bank accounts on the island will be emptied. Thus, if any sanctions are imposed on Russian oil transportation, Southern Cyprus will suffer a major loss in income.
In other words, a sham fight is in question between the Greek/Southern Cyprus duo and the EU. As I emphasized in my previous articles, Greece is following a strategy that pushes its own interests on the EU by instilling in the bloc a “fear of Turkey.” Reports by international media are pumping the message that in the event that the EU’s sanctions against Russian oil include the maritime sector, Greece and the GCAC have serious concerns that the void which will thus arise in maritime transportation will be filled by Turkey. We are well aware that Greek and Greek Cypriot bureaucrats are lobbying in commission corridors in Brussels saying, “The maritime sector should be excluded from sanctions. Otherwise, the Turks will come.” It would help if someone reminded Greece that Turkey is currently an EU candidate country.
Joke of the year
So, as for the joke of the year: While the Greek oil tanker fleet is made up of about 400 oil tankers with 45,786 dead-weight (DWT) tonnage, Turkey has but only 100 tankers with 1,698 DWT tonnage. In other words, it is technically impossible for Turkey to immediately, and in the short term, fill the void if EU-member countries cannot carry out oil transportation, as claimed by the Greeks wandering the corridors of the EU commission. Athens is trying once again to enslave the EU through a fear of Turkey to protect its own interests.
As a result, it is clear that the EU will become liberated once it escapes Greece and the GCAC enslavement, and produce policies in the interest of Europeans! But whether we will live to see that happen is another question!