BAKU, Azerbaijan, May 24. The possibility of EU oil ban on Russia is increasing, as EU is trying to get all put in place, including Hungary and German opposition, Cyril Widdershoven, a Middle East geopolitical specialist and energy analyst, a partner at Dutch risk consultancy VEROCY, and Global Head Strategy Risk at Berry Commodities told Trend.
The expert added that it depends also on Ukraine war, if Russia increases its operations.
Regarding the potential sources to replace Russian oil, Widdershoven noted that short-term is looking at SPRs (OECD), but mid-term we will need to find options in Africa, Latin America (Venezuela) or possibly Central Asia-Iran.
“The main challenges are: Supply volumes, as already indicated by Saudi minister energy, we are looking at less than 2 percent spare production capacity at present. The latter means less than 2 million bpd available, if a crisis starts or demand is growing faster. At the same time, the role of crude qualities, as taking out Russian Urals will result in shortages in several quality volumes, which are not yet able to be sourced somewhere else. Overall possible challenge also could be that due to low crude oil prices Russia demand will be heaped up, resulting in global shortages at other markets.
Possible other issues are GDP growth China, demand expectations India or a Black Swan issue (COVID-Monkey Pox) or a geopolitical confrontation. Inflation is playing a role, but not yet real demand destruction in markets,” he said.
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