Germany says it's ready to stop buying Russian oil, potentially allowing for a European Union ban on Russia's imports, but the United States is pushing its allies to avoid a complete ban that could drive up international oil prices for an extended basis.
Until this week, Berlin had opposed EU sanctions against Russian oil and gas, but Wednesday, the country's representatives removed the country's objections to a full embargo on Russian oil, but only if there is time to find alternate sources, reports The Wall Street Journal.
According to U.S. Treasury Secretary Janet Yellen, a full embargo would not only drive up international oil prices, but it would hurt the global economy while having "very little impact on Russia," which would just raise oil prices elsewhere.
Yellen said Europe could keep buying Russian oil, but put the payments into an escrow account that would keep Russia from obtaining the payments.
However, a European official told Newsmax that the German decision to keep Russian imports until after the U.S. midterm elections, due to fears that the resulting higher oil prices with Germany entering the global markets, would hinder Democrats' chances of keeping the House and Senate.
A decision on an embargo could come as early as next week, according to officials, but not everyone is behind that step. In addition to the United States and its push to avoid a full ban, other member states, including Greece, Hungary, Austria, and Italy, are cautious about an oil embargo, which must be approved by all 27 EU governments.
Russia has already stopped natural-gas deliveries into Poland and Bulgaria, after saying the countries refused to pay for the supplies in Russian rubles through a demand that EU buyers put deposits into special bank accounts to convert them into Russia's currency.
Russian oil accounts for about 27% of the EU's oil imports, with about $400 million going out in payments every day, according to the Brussels-based think tank Bruegel. The International Energy Agency reported that Oil and gas revenues accounted for 45% of the 2021 Russian federal budget.
It could also take Europe's oil refineries some time to be adjusted to receive crude oil from non-Russian sources. For landlocked countries that rely on pipeline delivery, it could be difficult to bring in oil from other places.
Several options must be considered by the EU, including gradually phasing out oil purchases, or stopping the purchases of shipped oil quickly while phasing out pipeline deliveries slower, a senior EU official said.
The aim in any scenario, the official said, is "to hit the Russians as hard as possible while at the same time minimizing" the cost of an embargo.
Germany was the biggest buyer of Russian energy during the first two months since the start of the war in Ukraine, according to a study published by the Centre for Research on Energy and Clean Air, an independent research group.
In that report, it was calculated that Russia earned 63 billion euros ($66.5 billion) through fossil fuel exports since Feb. 24, the date Russian troops attacked Ukraine. Of that, researchers said Germany alone paid Russia about 9.1 billion euros ($9.6 billion) for fossil fuel deliveries in the first two months of hostilities.
Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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