European Union (EU) officials are considering following in the footsteps of the UK and US by banning Russian oil imports in its latest round of sanctions this week.
Two months ago, EU states decided to sanction Russia’s oil majors Rosneft (LSE:ROSN), Transneft and Gazprom Neft but continued to buy oil from them. It placed restrictions on loans and debt financing, while it issued an investment ban that froze Putin’s funding from EU sources.
Britain announced in March it would completely phase out Russian oil imports by the end of the year, while America imposed an immediate ban.
Russia is the world’s third-largest oil producer behind the US and Saudi Arabia, according to Bloomberg, and Putin warned the world these bans would lead to "catastrophic consequences for the global market".
Europe is much more dependent on Russia for its energy than either the UK (8%) or the US (3%).
Prior to sanctions, over half of Russia’s five million barrels of crude oil it exports per day went to Europe.
The state was Europe’s largest oil supplier, providing over a quarter of EU oil imports in 2020, Eurostat said.
But which EU countries rely on Russian oil the most?
In terms of barrels per day (bpd), Germany is the top buyer of Russian oil in the EU at 550,000 barrels per day, which accounted for 34% of the nation’s 2021 oil imports, the International Energy Agency (IEA) said.
The German chancellor changed his cautious approach and confirmed the country is ready to back the EU’s potential ban decision.
New oil-supply contracts reduced Germany’s reliance on Russian oil to 12% of imports, preparing it for a possible embargo.
Poland, which like Germany sits on the main route for Russian oil to Europe (northern route of the Druzhba pipeline), brought in 300,000 bpd or 63% of its oil in 2021, Reuters said.
In terms of reliance, however, 96% of Slovakia’s oil imports in 2021 were from Russia but this was just 105,000 bpd.
Due to such high dependence, Slovakia and Hungary were expected to be exempt from the mostly EU-wide ban.
Lithuania and Finland, which both border Putin’s state, each get 185,000 bpd from there, accounting for 83% and 80% of imports in the respective countries.
Hungary imported 70,000 bpd or 58% of its total share, while the Czech Republic relied on 68,000 bpd – half of its total, the IEA said.
Ukraine, Belarus and Bulgaria were also heavily reliant on Russian oil imports.
What are the alternatives?
OECD members have 1.5bn barrels of oil, the London School of Economics said, which is enough for the EU to replace Russian oil exports for a year.
Meanwhile, industrial holdings control an extra 3bn barrels, the EU’s emergency oil stocks can meet demand for 90-100 days and the IEA released 60mln barrels from its emergency reserves to Europe.
Alternatively, America and Saudi Arabia could ramp up oil production to aid the EU and the rest of the world’s sanctions on Russia but there is much uncertainty about the latter's commitment.
The US energy secretary said in March its oil supply will be heavily bolstered by the end of 2022.
Saudi agreed to a modest bump in crude oil production from May, but this is expected to have minimal impact. A significant hike would likely require the oil exporter to break an agreement with OPEC and its allies, including Russia, NPR explained.