Three things have calmed fears over the impact of sanctions on oil markets.EU countries have managed to attract energy flows from countries across the world.Things are different now in the global energy markets to the way they were just after Russia invaded Ukraine on 24 February 2022. Back then, things from the oil markets’ perspective looked bleak, with Europe importing around 2.7 million bpd of crude oil from Russia and another 1.5 million bpd of oil products, mostly diesel.
In broad terms to begin with, back in the first half of 2022, even before the EU’s 27 member states met on 8 May to discuss pushing forward with the U.S.-proposed ban on Russian crude oil, Hungary and Slovakia had made it clear that they were not going to vote in favour of it.
It is apposite to note that Germany specifically had also been at the forefront of several EU initiatives designed to circumvent the mainly U.S.-led sanctions on Iran before 2011/2012. Shortly after the U.S. announcement of its unilateral withdrawal from the Joint Comprehensive Plan of Action deal between Iran and the ‘P5+1’ group of countries in May 2018, the EU had moved to impose its ‘Blocking Statute’ that made it illegal for EU companies to follow U.S. sanctions, as analysed in depth in .
Consequently, back in the first half of 2022, the only real flurry of activity by the EU was aimed at ensuring that Russia did not stop supplying its member states with either oil or gas due to their not being able to pay in the way Moscow preferred. This followed the 31 March 2022 decree signed by Russian President Vladimir Putin that required EU buyers to pay in roubles for Russian gas via a new currency conversion mechanism or risk having supplies suspended.
Since then, however, three key things have happened that have calmed these fears. The first is a slew of deals engineered by the U.S. and EU that have secured new energy supplies into Europe. These include major LNG deals with
But devastating on Russian budget. This is how politics is done. And Soviets are surprised, like they didn't collapsed already.