Western countries are looking for new options to buy crude oil amid fears of recession and threats of world war. Since Russia’s attack on Ukraine, the European Union has reduced its purchase of oil from this country in order to deal with an economic blow. At the same time, many other countries including the oil producing country America are eyeing the crude oil of Russia, which gives it a lot of revenue. The biggest objective of the Western countries is to reduce the import of Russian crude oil in an exercise to help Russia in this sector.
For this, he has also advised other countries of the world not to buy crude oil from Russia. Western countries had also warned India, which has friendly relations with Russia, not to buy oil from Russia, but even after this, there is one thing that has not changed that European countries are still dependent on the import of crude oil from Russia. The European Union, which is talking about imposing sanctions on Russia in December, is also taking steps in this matter.
India will buy oil at will
Just a week ago, India’s Union Oil and Natural Gas Minister Hardeep Singh Puri had made it clear on Friday (October 8) that to meet the energy needs of its citizens, it would buy crude oil from where it would get. Minister Puri’s statement came in the midst of such reports when it was being said that there is pressure on India not to buy crude oil from Russia. Significantly, Western countries stopped buying oil from Russia after the attack on Ukraine. As a result, the price of Russian crude oil fell. In the midst of all this, the revenue coming from Russia’s oil kept coming from China and India. Both these countries continued to buy crude oil from Russia at low prices.
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Now when OPEC Plus, meeting with 13 oil exporters and 10 countries of the Plus group, decided to reduce its oil production, it caused a stir in the crude oil market. OPEC Plus in the first week of this month has decided to reduce oil production by 2 million barrels per day from November. Significantly, Russia leads the OPEC Plus countries. Western countries like America are shocked by this decision of OPEC. He has accused this organization of supporting Russia. Saudi Arabia has an edge in the OPEC Plus group. This country’s Crown Prince Mohammed bin-Salman is with Russian President Vladimir Putin. There is a stir in the western countries about this, even after lakhs of efforts, they have not been able to reduce their dependence on import of crude oil from Russia. This is the reason why these countries are increasingly trying to find an alternative to Russia.
#WATCH , “…India will buy oil from wherever it has to for the simple reason that this kind of discussion can’t be taken to consuming population of India…Have I been told by anyone to stop buying Russian oil?The answer is a categorical ‘no’..,” says Petroleum & Natural Gas Min pic.twitter.com/rgr0Abg9K0
— ANI (@ANI) October 8, 2022
Russia’s stature in crude oil
Russia’s crude oil producer ranks third in the world map. Russia comes only after America and Saudi Arabia. Russia exports 40 to 5 million barrels of crude oil daily. If we talk about Russia’s natural gas exports, then this figure is 8,500 billion cubic feet every year. European countries import 40 percent of gas and 30 percent of oil from Russia.
If this supply is interrupted in any way, then Europe will have to face difficulty in finding its alternative. European countries consume more gas than oil. To meet the EU gas consumption, 61 percent of the gas is imported from other countries. Of the 61 percent imported gas, Russia imports 40 percent of the gas to the EU. To avoid a crisis like gas supply interruption, European countries are taking steps carefully before imposing sanctions on Russia.
Attempt to break Russia through oil
The western country is in full preparation to surround Russia in terms of crude oil. In fact, the proof of this came to the fore only in the 8 months of the year 2022. Crude oil imported from Russia into the EU and UK was 2.6 million barrels per day (bpd) in January before Russia’s attack on Ukraine, while it fell to 1.7 million barrels per day (bpd) by August since the February attack. has reached. Western countries have reduced oil imports from Russia by 35 percent in this period of 8 months. Despite this, the European Union still remains the largest market for Russian crude oil, according to the International Energy Agency (IEA).
Russia has threatened
Russia attacked Western countries in March, shortly after the invasion of Ukraine. In fact, only after Russia’s attack, European countries had imposed sanctions on it and warned. Only then did Russia threaten these countries that it could also take action like closing the main gas pipeline carrying gas to Germany. On Wednesday (October 12), Poland said it had detected a leak in a pipeline in the Druzhba System.
However, the possibility of deliberate sabotage in this pipeline has not been completely ruled out. Significantly, this pipeline carries oil from Russia to Europe. This has raised concerns about Europe’s energy supply. The continent has been facing an energy crisis since Russia’s invasion of Ukraine. This is an incident that is going to raise concerns about Europe’s energy security after the Nord Stream gas pipeline leak. Germany has already refused to sign an agreement with Russia on the Nord Stream 2 gas pipeline agreement.
When oil imports stopped
Britain has already stopped importing Russian crude oil after Moscow’s attack on Ukraine. In the sequel, the European Union is trying to snatch the revenue of the Kremlin, which finances the war. Crude oil plays an important role in this revenue and the EU will ban the import of crude oil from Russia from December 2022. Due to the reduction in the amount of excess crude oil in the world in general, it is feared that these sanctions will create a shortage of oil globally. The United States has occupied part of the imports of Russian oil that the EU and UK have stopped.
Right now the US occupies about half the 800,000 barrels of oil imported from Russia in the EU and the UK. While these countries import about a third of crude oil from Norway. According to The International Energy Agency (IEA), the US may soon overtake Russia as the main exporter of combined crude oil of the European Union and Britain.
Compared to the crude oil that EU and UK import from America, then America has lagged behind Russia in comparison to the oil imported from Russia by these countries. According to the IEA, European countries’ average pre-war oil imports from the US were only 40,000 bpd behind Russia by August 2022, compared to 1.3 million bpd. Talking about Russia, its top crude oil export markets outside the European Union are China, India and Turkey.
of the European Union Russian’s dependence on crude oil
Until last year, Germany, the Netherlands and Poland were the top importers of Russian oil in Europe, but all three countries have the potential to bring in marine crude. Landlocked countries in Eastern Europe, including Slovakia and Hungary, have few options other than Russia’s pipeline supply.
Russian companies such as Rosneft and Lukoil have also affected the EU’s oil dependence on Russia. Some of the biggest oil refineries of this block come under their control.
According to the IEA, based on the loading data for August, the flow of Russian crude oil to Italy and the Netherlands has increased month by month. Here Russian oil major Lukoil owns refineries. On 16 September, the German government took control of the Rosneft-owned Schwedt Refinery.
This refinery supplies about 90 percent of the fuel in Berlin. In addition, the Italian government said in September that it expected Lukoil to find a buyer for its ISAB refinery in Sicily. Which is one fifth of the country’s refining capacity.
What are the substitutes for Russian crude oil?
The IEA has said that the European Union will need to explore an additional 1.4 million barrels of Russian crude oil, given the looming threat of sanctions on Russia from December.
In such a situation, Europe will not be in a hurry to say no to Russia’s oil and gas. Europe is looking for alternatives for this supply. Among these options, America is at number one and second is Kazakhstan. Of which about 300,000 bpd are likely to come from the United States and 400,000 bpd are likely to come from Kazakhstan. Currently, Europe is buying a lot of oil from the Middle East and elsewhere.
Norway is also ready to catch the shortfall of European countries’ oil imports from Russia. Norway’s largest oil field is Johan Sverdrup, which produces medium-heavy crude oil similar to Russia’s Ural. Norway plans to potentially ramp up crude oil production in the region in the fourth quarter. It is believed that the production of crude oil here will be increased to 220,000 bpd.
The IEA says that imports from other countries such as the Middle East and Latin America will be needed to fully meet the EU’s oil demand. Significantly, on 6 March 2022, the famous oil company Shell had said that it was forced to buy oil from Russia in order to continue the oil supply in Europe.
In view of the possible sanctions on import of crude oil on Russia after a month, it is natural to increase pressure on other options. This can also be expected to bring about a change in global politics. In order to continue importing crude oil to Europe, America can ask Saudi Arabia to increase the production of crude oil.
Some decision can also be expected on Iran’s nuclear deal deal. With this, it can also be expected to ease the restrictions on oil exports on Iran.
Oil will continue to flow into the EU via some Russian oil pipelines, as some landlocked refineries are out of the purview of the embargo. However, oil supplies will be from them only until Russia itself decides to stop the supply from there.
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