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outlets from distributing content in the EU, a 9bn euro ($9.7bn) aid package for Ukraine, and removing Sberbank from the global SWIFT system. Sberbank is Russia’s largest bank, accounting for 37% of the Russian banking sector. Removing it from SWIFT will make international transfers difficult and further isolate Russia from the global economy.
2.6 Europe will give up 90% of Russian oil
Europe is giving up 90% of its Russian oil imports. Will Russia’s economy survive?
On May 31, after a month and a half of negotiations, the EU announced its decision to impose a partial embargo on Russian oil. The embargo’s main purpose is to cut off “a huge source of financing for [Russia’s] war machine.”
Russian oil brought by sea to EU countries will be fully banned six months after the embargo is imposed. Oil products will be banned in eight. Sea transport is currently the main means of delivering Russian oil to Europe, accounting for 75% of Russian oil exports to the EU.
Exceptions have been made for several countries that rely on Russian oil more heavily than others. Hungary, the Czech Republic, and Slovakia will be allowed to continue importing oil through the Druzhba pipeline’s southern branch. Meanwhile, some of the bigger consumers of Russian oil will stop importing it through the pipeline’s northern branch.
Bulgaria received permission to delay the embargo on sea shipments until the end of 2024. No deadline has been set for Hungary, the Czech Republic, and Slovakia, but if Hungary, the embargo’s main opponent, delays the negotiations process, the European Commission is prepared to force it to join the sanctions by implementing prohibitive duties.
By the end of the year, when Germany and Poland stop purchasing pipeline oil, the embargo will cover 90% of Russian oil imports to the EU.
Europe is the largest market for Russian oil exports. In 2021, half of all exported Russian oil went to EU countries. China, in comparison, accounted for 31% of the exports (71mn metric tonnes), while India accounted for 1% (1.9mn metric tonnes).
In January 2022, Europe imported a little over 4mn barrels of Russian oil and oil products per day. By May, however, that figure had fallen to about 3mn barrels per day due to voluntary refusals from companies and decisions made by individual governments. Hungary, Slovakia, the Czech Republic, and Bulgaria, all of which will be excluded from the embargo, accounted for only 0.31mn barrels a day, or 8% of the total supply to Europe, in May.
Oil and gas revenue is Russia’s largest income source. Despite numerous statements from the authorities, the country didn’t manage to kick its “oil addiction” by the time the sanctions war with the West began. In 2021, energy
21 RUSSIA Country Report October 2020 www.intellinews.com