EU refrains from halting Russian oil and gas imports for the time being

by David Fleschen

The EU has agreed on a further package of sanctions against Russia. This includes a stop on coal imports from Russia (see below), but not an import ban on Russian oil and gas. However, this does not take the issue off the table. Britain is demanding a clear timetable from the G7 countries for the phase-out of Russian oil and gas imports. German Foreign Minister Baerbock said that the EU's dependence on fossil fuels from Russia must be ended step by step. Coal would make the start, followed by oil and gas. So the EU is still keeping this sharpest sword in the sanctions box up its sleeve.

Whether it will be drawn also depends on how quickly the EU countries can reduce their dependence on Russian oil and gas. In the case of oil, this is likely to happen more quickly. Moreover, an import ban on oil would hit Russia much harder in terms of revenue than the renunciation of natural gas. It is therefore likely that an oil embargo would come sooner than an import ban on natural gas. The fact that this was refrained from for the time being caused oil and gas prices to fall yesterday. Brent fell to 104.5 USD per barrel. Gas oil even dropped by 5% to 1,080 USD per tonne. This is because with the waiver of an oil embargo, diesel continues to flow from Russia to Europe. The European natural gas price lost almost 4% yesterday to EUR 106 per MWh. Natural gas from Russia also continues to flow normally. Yesterday, just under 2,730 GWh reached Germany and Slovakia via NordStream and Eustream, which corresponded to the level of the previous days.

Source: Commerzbank Research, Photo: Fotolia

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