EU sanctions stick to Russian oil, European economy may be more hurt.
Xinhua News Agency, Valletta, May 5th(International observation) EU sanctions stick to Russian oil, European economy may be more hurt.
Xinhua News Agency reporter Chen Wenxian Li Jizhi
On the 4th, the European Commission formally submitted a new round of sanctions, including an oil embargo on Russia, and once again swung the sanctions stick at the Russian energy sector. The analysis believes that once the oil embargo is imposed on Russia, the European energy crisis will further deepen, ordinary families will bear higher energy bills, and the operating costs of related industries will also be raised, which will lead to an increase in the risk of European economic stagflation.
The energy crisis worsened.
The proposal of the sixth round of sanctions against Russia submitted by the European Commission on the 4th includes a total ban on the import of Russian oil by the end of this year, that is, the EU will gradually phase out Russian crude oil within six months and Russian refined oil by the end of this year.
After the EU announced on April 8 that it would stop importing Russian coal from August, the EU once again "cut the knife" to Russian energy to achieve the goal of greatly reducing its dependence on Russian energy. At present, about 40% of natural gas, about 30% of oil and slightly less than 20% of coal imported by the EU come from Russia, and Russian energy plays an important role in the EU energy consumption market and economic development.
Sanctions against Russian oil are a "double-edged sword" for the EU. While Russia’s oil revenue is greatly reduced, it is difficult for the EU to seek alternative sources from the already tight international market in a short time, and its own energy crisis will intensify.
Russia expects oil production to drop by about 17% this year. Market analysts believe that the reduction of Russian oil production will make the global oil supply more tense and aggravate market worries, and oil prices are expected to soar again.
Michael Holstein, chief economist of the German Central Cooperative Bank, believes that the oil embargo against Russia may continue to push up oil prices in the next few months, and the German inflation rate may remain at a high level for a long time.
There are obvious internal differences
Just as EU member states hold different opinions on Russian natural gas "ruble settlement order", countries also have differences on sanctions against Russian oil. There has been a heated debate within the EU for some time, but the final plan has not yet been fully agreed, and there are certain variables in the details of the plan.
Since the escalation of the conflict between Russia and Ukraine, the EU has repeatedly expressed its desire to "get rid of" Russian oil and gas in the round after round of sanctions, but it is quite difficult for the EU to really do this.
The sanctions against the Russian oil embargo need to be unanimously agreed by 27 member States before it can take effect. Ursula von der Leyen, president of the European Commission, admitted that it was not easy to pass the proposal because some member countries were highly dependent on Russian energy. At present, Hungary, Slovakia, the Czech Republic, etc. all said that they could not find alternative sources quickly and needed a long transition period.
Gullyas Gergely, Minister of the Hungarian Prime Minister’s Office, said that Hungary was "ready to veto" the relevant proposal, and it would take about five years and cost "a lot of money" to switch oil and gas sources.
Stagflation risk intensifies
Soaring energy prices, record high inflation and supply chain shortage have aggravated the risk of stagflation in Europe, which will hinder the recovery after the COVID-19 outbreak. According to Eurostat data, the euro zone economy grew by only 0.2% in the first quarter, while the inflation rate was as high as 7.5% in April.
The report of Bruggaier Institute, a Belgian think tank, said that the embargo on Russian oil would have negative consequences for the EU, at least in the short term, causing losses to the EU and the whole world economy.
Sarah Mathieu, a member of the European Parliament, said that these sanctions will not only harm the Russian economy, but also "affect the housing, jobs and wallets of EU people", which may increase social inequality, push up unemployment and aggravate energy poverty.
Eugenio Pinto, a professor of economics at Rome International Free University of Social Sciences, said in an interview with Xinhua News Agency that if countries that are highly dependent on Russian energy stop importing Russian energy, they will be forced to adopt an energy quota system and their economic recovery will come to a standstill.
Peter Adrian, president of the German Chamber of Commerce and Industry, said that rising oil prices will increase the financial pressure of enterprises, especially for energy-intensive industrial and logistics enterprises. In extreme cases, enterprises may be forced to close down for cost reasons.
Molditz Jobaugh, research director of Eurasian Center of Hungarian john von neumann University, said in an interview with Xinhua News Agency a few days ago that sanctions alone will not help to solve the conflict between Russia and Ukraine, and negotiations must be held, because it is not a good solution to completely cut off diplomatic, economic and commercial ties with Russia. (Participating in reporters: Chen Hao, Zhu Xi, Chen Zhanjie)