Taking advantage of Russia's cheap oil, the EU

Updated: Jul 23

Data reveals that Moscow is pumping more crude to the continent than it did before the sanctions.

The Economist reported on Wednesday, citing data from Argus Media, that between January and April, the supply of Russian oil to the European Union increased by 14%, from 750,000 to 857,000 barrels per day. This occurs at a time when Brussels has urged an end to all imports of energy from the nation.

The most recent EU embargo on Russian oil, according to the report, now only covers 75% of imports from Moscow and only applies to crude and petroleum products transported by water. It stated that oil sent by pipeline to a select group of nations in central and eastern Europe is momentarily excluded. The inexpensive Russian crude that the majority of Western purchasers are avoiding is being snatched up by refiners in these nations.

Since the start of the crisis in Ukraine, only one receiving nation—Germany—has decreased imports through the Russian Druzhba pipeline, according to data. One of the world's longest and largest oil pipeline networks, Druzhba, transports the fuel 4,000 kilometers from eastern European Russia to refineries in the Czech Republic, Germany, Hungary, Poland, and Slovakia. Berlin received half of the Druzhba oil in January, but only a third by April.

The Czech Republic and Slovakia claim to support a future Druzhba import ban but demand a two- to three-year transitional phase. Viktor Orban, the prime minister of Hungary, has been fighting against a total ban on Russian oil imports, calling such a move an "atomic bomb" to his nation's economy.

While Urals crude is priced significantly below the global benchmark Brent, there is "no financial incentive for refiners to dump Russian supply," according to the Economist analysis. According to Argus Media statistics, refiners importing through the pipeline purchased it for up to $40 less per barrel than North Sea oil last month.

The Druzhba exemption will be reviewed, said EU leaders. The pipeline appears to be putting European friendships to the test in the interim, according to the story.

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