Sixth package of anti-Russian sanctions blocked
But Brussels retains its goal to impose an embargo on Russian oil
Russia's prominent role in the global oil market prevents the West from promptly adopting new sanctions against oil supplies. Thus, the "sixth package" of EU sanctions against Russia, focusing on the waiver of Russian oil, is still blocked: on May 16, High Representative of the Union for Foreign Affairs and Security Policy Josep Borrell said the EU Foreign ministers failed to agree on the new package.
Hungary and Slovakia are most opposed to oil embargo introduction. Notably, the EU was ready for occasional alleviations. According to Bloomberg, Budapest and Bratislava could be allowed to buy oil until the end of 2024. The agency also reported that the European Union was ready to allocate €2 billion to countries most dependent on Russian fuel. But Hungary is asking for massively more ˗ its "compensatory appetite" was estimated by the country's authorities at €15 billion. Hungarian Foreign Minister Peter Szijjarto said "Hungary rightly expects a solution from the EU [in case of banned Russian oil supplies]: financing investments and compensating for the resulting price increase, which will a complete modernization of the country's energy infrastructure worth €15 to 18 billion." Hungary also suggested imposing sanctions only on sea shipments (the country has no access to the sea). It is clear the EU won’t abandon its plans to adopt the sixth package. Brussels will undoubtedly keep discussing its details, format and implementation "horizons". Lack of consensus is brought about irregularities in terms of EU states’ dependence on Russian oil, with an embargo being much like economic suicide for some of them.
In combating Russian oil, the United States has not only engaged the EU. G7 has now conceived a consumer cartel to set and dictate prices for Russian oil. Interestingly, the White House has long been seeking ways to legally "temperate" and punish OPEC, the global alliance of oil producers. It is permanently threatening the unification of global oil producers with the notorious NOPEC ˗ an anti-cartel bill being currently considered. Cartels turn out acceptable if initiated/created by the United States itself.
The situation remains challenging in the European gas market, too. Prospects for Europe’s waiver of Russian gas, nuances of transition to ruble payments, and the augmented list of holdouts ˗ these are the key gas field events this month.
A fresh case is Helsinki’s gas demarche: on May 21, Gazprom stopped supplying gas to Finland over refusal to cooperate under the new scheme. The Finns joined Bulgaria and Poland on the list of holdouts. But, according to Russian Deputy Prime Minister Alexander Novak, out of more than fifty Gazprom counterparties in the EU, more than half have set up Gazprombank accounts. In other words, they adopted the new gas supply payment scheme, as many European countries have zero ambitions to go on with risky economic experiments. Despite calls by European hawks (as represented by European Commission head Ursula von der Leyen and EU chief diplomat Josep Borrel) to boycott Russian energy resources, the process is not being accelerated. Yet the European Union’s strategic anti-Russian course is obvious.
Meanwhile, Europe suffers from skyrocketing inflation, risks of reduced industrial production and unemployment growth, while European bureaucrats urge to keep fighting "for European values." However, it only remains to be seen how ordinary people will respond to the growing economic mess at the end of the day.
Russian oil and gas are flowing to Asia-Pacific markets. This has been Moscow’s lingering strategic course, which is now accelerated over the West’s sanctions activity. And it’s not only about China. For instance, April saw Russia become the fourth largest oil supplier to India, leapfrogging six other countries in a month’s time. Russian share of India’s oil imports surged to a record high of 6%. And the sky is the limit. Indian companies are clearly seeking a discount, but the latter would rather likely maintain export volumes than drive up prices.
The Asia-Pacific market is becoming the backbone for Russian oil and gas exporters, with the pivot being agile so far. However, one must keep in mind infrastructure limitations that will some time to get eliminated.
