Imports of Russian oil into the EU will decrease significantly - five questions and answers about oil imports

Europe's dependence on Russian oil as an energy source varies greatly. In Lithuania and Poland, Russian oil accounts for a quarter of all energy consumption.

Imports of Russian oil into the EU will decrease significantly - five questions and answers about oil imports
The number of Russian tankers in Europe is declining. Two-thirds of crude oil comes from shipping.

The number of Russian tankers in Europe is declining. Two-thirds of crude oil comes from shipping.
The ban on Russian crude oil imports announced by the EU last night is set to cut imports by 90% by the end of the year.

We found out what the recent sanctions mean in their entirety.

Laura Solanko, Senior Adviser at the Bank of Finland, and Petri Vuorio, Director of the Confederation of Finnish Industries, have been interviewed as experts.

1. To what extent do sanctions affect oil imports?

The sanctions will have a significant impact on the volume of crude oil imported from Russia.

Petri Vuorio:

- The Commission aims to halt 90% of Russian oil imports into the European Union by the end of the year, a significant amount. The temporary exception is pipeline gas, especially for Hungary.

Laura Solanko:

- The EU imports about a quarter of its crude oil and just over a third of its oil imports from Russia. There are no sanctions for this.

2. What do the new sanctions mean?

The sixth round of sanctions is aimed at Russian crude oil and other refined oil transported by sea. For the time being, the import ban does not apply to oil delivered via pipelines. In Finland, Neste has previously announced that the purchase of Russian crude oil will end by the turn of the year.

- For the Member States of the European Union, it is aware of the transition to other grades of oil. At the same time, they mean a significant loss of income for Russia from the European Union. The big question is how much and at what price, Russia can sell this oil to China and India, for example, says Petri Vuorio.

3. How do sanctions affect the price of oil?

The price of crude oil peaked two months immediately after the EU's partial import ban. Demand will increase during the holiday season at the same time as supply decreases.

In the longer term, the price of crude oil is now as high as last time in 2008.
Growing demand in China is also raising prices.

- It is likely that there will still be upward pressure on prices, even though the market has already partially anticipated current developments in its pricing, says Petri Vuorio.

- The price of Russian oil is falling and the price of other grades is likely to rise, says Laura Solanko.

Oil consumption also depends, among other things, on the increased use of fossil fuels. The transition to them will reduce the demand for oil.

4. How easy is it to find alternatives to Russian oil?

According to experts, giving up pipeline oil is much more difficult than shipping.

- Oil is a product of world trade, so oil-based maritime transport is substitutable despite the price effect. In this, for example, Finland is well advanced, and Russian oil has almost been abandoned. Supply chains based on pipe oil, on the other hand, are more challenging to replace, says Petri Vuorio.

- Of course, difficult, but not impossible, says Laura Solanko.

The Organization of the Petroleum Exporting Countries (OPEC) will decide on new production volumes on Thursday.

5. How dependent are different countries on Russian imported oil?

EU countries' dependence on oil from Russia varies.

Some countries are inland and cannot import oil by sea, so there are few alternative oil suppliers. According to statistics, Slovakia is the most dependent on Russia. Here are the ten EU countries with the highest oil imports from Russia in 2020:
Countries also differ in how much of the energy consumed comes from oil.

In 2020, the EU average was 35%, but in some countries, the share of oil was as high as half - in Greece, Ireland, and Luxembourg. In 2020, Finland's energy consumption became almost a quarter of oil.

Combining the data, it can be seen that Russia's imports to Slovakia, for example, have been significant in terms of total energy consumption. In 2020, it received about a fifth of its energy from Russian oil and Lithuania and Poland about a quarter. In 2020, Finland also received about 16 percent of the energy it used from oil produced in Russia.