Russia Says Europe Will Struggle To Replace Its Oil Products

Europe will find it difficult to replace Russian crude oil and product supply once the full effect of the EU embargoes on Russian petroleum products is felt, according to Russian Deputy Prime Minister Alexander Novak. “Europe used to be a key market for the sale of our oil products. Let us wait and see which decisions they will make in the long run. So far, we don’t know what may substitute for our fuel,” Novak said in an interview with local news agency TASS published on Sunday. Some EU member states could request to be exempted from the embargo on seaborne imports of Russian oil products, the top Russian energy official said. “Probably, they will resort to exemptions, like it was with oil, when the restrictions did not apply to pipeline supplies, refineries in Bulgaria, the Czech Republic, and Slovakia. Even Germany and Poland, who declared their refusal from Russian oil, have applied for it for 2023,” TASS quoted Novak as saying. The EU embargo on imports of Russian crude oil by sea came into force on December 5, while the embargo on seaborne imports of Russian oil products will take effect on February 5. Although the EU embargo and the EU-G7 price cap on Russian crude oil at $60 per barrel didn’t immediately roil the oil market – although traders were concerned about a possible demand hit from slowing economies – uncertainty is growing over how the bans on Russian imports will affect supply balances over the next few months. As the EU embargo on imports of Russian diesel enters into force, “The competition for non-Russian diesel barrels will be fierce, with EU countries having to bid cargoes from the US, Middle East and India away from their traditional buyers,” the IEA said in its monthly report in November. In the December report, the agency said, referring to Russian exports, “Crude oil loadings were unchanged on the month at just over 5 mb/d, despite a 430 kb/d drop in shipments to Europe. By contrast, product flows (in particular of diesel) surged, including to Europe.”