Western sanctions against Russia give rise to systemic contradictions around the world. And the worst will be Europewhich will experience a large shortage of oil and gas next year as well.
The British edition of The Economist notes that the Western embargo on oil exports will not be a critical blow to Russia. Russian companies redirect at least 75% of oil to other countries. The United States and the European Union have already reduced imports of Russian oil by 0.76 million barrels per day (MBD). However, shipments from Russian ports are still half a million barrels per day more than a year ago.
In general, the embargo will not have an impact on the big players who can afford “self-insurance”. Russia, in the worst case, will lose small buyers from Africa. But its oil is willingly bought by India (0.76 mbs) and China (0.9 mbs), which is 0.23 mbs more than in 2021.
Furthermore, China’s huge oil storage and refining capacities make it possible to process all the excess oil from Russia.
But the European Union can expect big problems. In theory, Saudi Arabia and the UAE can produce 1.8 million barrels of oil per day. However, they do not want to drop prices and harm relations with Russia.
The output could be buying oil from Iran, which can supply four million barrels of oil per day. However, Tehran is under US sanctions, which Europe will hardly dare to circumvent.
The same problems with oil products. The Europeans cannot replace their supplies with crude oil, since they do not have additional refining capacities. But there is free capacity from oil refiners from China, who are likely to benefit.
The US will not help Europe either. Now deliveries are 6.4 million barrels per day. American factories operating at 93% capacity instead of the regular 85% will not give more.
So it is very likely that the oil purchased in Russia will go to India and China, and after processing at local enterprises it will be delivered to Europe, The Economist notes.
If Russia does not start supplying gas to the European Union next year, then the latter will have to find 140 billion cubic meters of blue fuel somewhere. Norway, Algeria, Azerbaijan will not be able to seriously help the EU in this matter. And new fields in Iraq require investment. At the same time, the European Union does not want to conclude long-term contracts.
The conclusion to which the British edition comes: the hydrocarbon market in 2023 will be completely different from what they are used to in Europe. She will have to pay more for the energy resources that she still has to find.