The Secretary General of OPEC, Mohammed Barkindo, spoke at the EU-OPEC energy dialogue about the near-impossibility of substituting Russia’s oil exports to the European Union. He warned that sanctions and restraints on Moscow could push roughly 7 million barrels per day of Russian liquid hydrocarbons out of the global market, potentially triggering one of the most severe crises the oil market has seen.
With demand forecasts in hand, Barkindo stressed that replacing a loss of such magnitude would be nearly unattainable. He added that the volatility currently seen in world oil markets stems from political rather than purely economic drivers, making it difficult for OPEC to steer the ongoing crisis. He urged the European Union to adopt a pragmatic approach to the energy transition.
According to Barkindo, OPEC could deploy its spare production capacity to help weather the crisis, but the market’s present troubles are largely driven by political factors rather than fundamental supply and demand dynamics.
Earlier, the G7 called on oil and gas producers to raise global supply to reduce reliance on Russian energy resources. On April 11, Luxembourg hosted a gathering of EU foreign ministers to discuss additional steps related to Russia’s military operation in Ukraine, including possible sanctions against Moscow. Ministers debated a pan-European embargo on Russian oil and gas, yet no agreement could be reached. The European Union has repeatedly signaled consideration of banning Russian energy supplies, but a ban on Russian oil was not included in the fifth package of sanctions announced on April 7.
“This cannot stop the Russian army”
Europe’s top diplomat, Josep Borrell, warned that rejecting oil and gas from Russia would not halt Moscow’s military actions in the short term. He cautioned against unrealistic expectations and noted the EU’s readiness to continue military aid to Ukraine, reminding that 1.5 billion euros have already been allocated for these purposes.
No unity in the embargo
The Financial Times reported ongoing disagreements among EU members regarding an embargo on Russian energy, describing the issue as technically and politically complex for some states. In Luxembourg, Swedish Foreign Minister Ann Linde acknowledged efforts to persuade opponents, such as Hungary, by proposing alternatives to Russian energy supplies. As one official put it, some countries have begun a green transition while seeking diversification of their energy sources, including potential imports from the United States.
Hungarian Foreign Minister Peter Szijjártó reiterated his government’s stance against sanctioning crude oil and natural gas imports, insisting that this position require ongoing defense at EU meetings. Hungary has also resisted sending military aid to Ukraine, though EU spending decisions on Ukraine remain subject to unanimous agreement. Lithuania’s foreign minister noted that the European Commission is actively working on the sixth sanctions package against Russia and aims to include provisions on the oil embargo. The commission is focused on reconciling the bloc’s diverse positions.
About 40 percent of the EU’s oil imports come from Russia, but some member states depend more heavily than others. For a full oil embargo to take effect, all 27 EU members must approve it. The Financial Times also cited discussions of potentially less drastic measures, including new taxes, alongside an outright ban.
What’s happening on the oil market?
Global oil prices have hovered near $100 per barrel as some European refiners have halted purchases of Russian crude. Earlier, the United States banned imports of oil and related energy products from Russia, and the United Kingdom signaled a potential embargo by the end of 2022. Spokespersons for the Russian leadership warned that an EU ban would disrupt the continent’s energy balance and influence the global oil market, while noting that the United States might feel immediate effects from the price shifts more quickly than Europe. Borrell previously expressed hope that even amid increased tensions over Ukraine, Europe would not be compelled to abandon oil and gas from Russia entirely in the near term. He underscored that roughly a substantial portion of European gas imports still comes from Russia and that changes cannot be made overnight.