In the sixth package of sanctions, the European Commission proposed to abandon oil from Russia in Europe within six months

Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented to the Business FM radio station on the possible consequences for the Russian oil industry from the introduction of the oil embargo by the EU countries.

The European Commission has submitted the sixth package of anti-Russian sanctions for consideration. The head of the EC, Ursula von der Leyen, said that it is proposed to ban all Russian oil in Europe. The refusal should take six months and be completed by the end of this year.

Alexey Gromov, Energy Director of the Institute of Energy and Finance:

“Reducing production is possible in the corridor from 8% to 17%. Why such numbers? We see that Russian oil is having difficulty to find buyers on the world market, not only because of sanctions pressure, but also because of the difficulties associated with the logistics for the supply of Russian crude oil, with cargo insurance and with the terms of contracts. All countries that buy up Russian oil today, which, for example, was intended for European suppliers, almost require a significant discount by default. The average discount for Russian oil today is about $30 per barrel, which, given the world price, which fluctuates around $100 or slightly higher per barrel, is a significant amount. For comparison, the same Iranian oil is sold on the market at a discount of $20 per barrel. I think that the practice of selling Russian oil at a discount will continue in the near future, but in the second half of the year, positive changes are possible for Russia in the oil market. Closer to the autumn-winter heating season, and taking into account the fact that China will sooner or later come out of its restrictions due to the coronavirus pandemic, it is likely that world oil prices will rise and the discount on Russian oil will decrease.”