EU’s curbs on Russian oil criticized for driving up global prices
Published: May 31, 2022 06:38 PM
An oil pump is seen in Almetyevsky District, Republic of Tatarstan, Russia. File Photo: CFP

An oil pump is seen in Almetyevsky District, Republic of Tatarstan, Russia. File Photo: CFP

The EU's new curbs on Russian oil imports, intended to put more pressure on Russia over the Ukraine conflict, will backfire by driving global crude prices up to about $130 per barrel after hitting a two-month high of $120 per barrel, dealing a further blow to European countries' recovery from the COVID-19 pandemic and further disrupting global oil markets, a Chinese expert said on Tuesday.

The EU has agreed to ban imports of Russian oil, European Council chief Charles Michel tweeted on Monday. He said the move covers more than two-thirds of oil imports from Russia. The move covers Russian oil brought in by sea, allowing a temporary exemption for imports delivered by pipeline so as to get landlocked Hungary on board with a decision that required consensus, according to an NPR report.

"The EU's move will disrupt global supply chains for oil, as the continent has to look for new import sources, and building new infrastructure like pipelines will take years," Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times on Tuesday.

The global crude price could surge to about $130 per barrel, Lin said, and stay above $100 per barrel over the next two to three years. "This would deal a strong blow to the already slowing EU economic recovery," he said.

Brent crude - the international benchmark - climbed on Monday to $120 a barrel for the first time in two months. According to a note from Goldman Sachs, a sustained $20 oil price shock will lower real economic growth in the eurozone by 0.6 percent and by 0.3 percent in the US, Reuters reported in March.

In 2021, more than half of Russia's oil exports went to Europe, which received about one-third of its oil from Russia. Germany was the largest European buyer, followed by the Netherlands and Poland, data from the International Energy Agency showed.

The latest EU sanctions include other measures, including removing Russia's largest bank Sberbank from the SWIFT international payments system, banning three other Russian state-owned broadcasters and sanctioning some individuals, according to Michel's tweet.

Despite strong resistance by members like Hungary, the EU still pushed to reach a deal, showing that the US has raised the pressure on the North Atlantic Treaty Organization (NATO) in a bid to force Russia to make concessions as soon as possible, a Chinese expert on Russian issues told the Global Times on Tuesday.

"The rollout of the sixth round of sanctions shows that these moves have been increasingly ineffective in pressuring Russia," said the expert, noting that some Western energy companies may find ways to continue the profitable business while circumventing the embargo.

Russian media Komsomolskaya Pravda reported on April 3 that Deputy Secretary of the National Security Council of Russia Mikhail Popov said that the US has forced Europe to impose sanctions on Russia, but the US continues to import oil from Russia and this increased 43 percent in the past week to 100,000 barrels per day.