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The Case for and against EU Sanctions on Russian Oil

A large European Union flag lies at the center of Schuman Square outside European Commission headquarters in Brussels, Belgium, May 8, 2021. (Reuters)
A large European Union flag lies at the center of Schuman Square outside European Commission headquarters in Brussels, Belgium, May 8, 2021. (Reuters)
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The Case for and against EU Sanctions on Russian Oil

A large European Union flag lies at the center of Schuman Square outside European Commission headquarters in Brussels, Belgium, May 8, 2021. (Reuters)
A large European Union flag lies at the center of Schuman Square outside European Commission headquarters in Brussels, Belgium, May 8, 2021. (Reuters)

European Union countries on Thursday approved a ban on Russian coal imports from August as part of new measures against Moscow, but are split over whether oil or gas sanctions should follow.

The coal embargo is the EU's first energy sanction against Moscow following its invasion of Ukraine. Officials say the bloc will now discuss sanctions on oil, which represent far bigger imports from Russia than coal.

However, not all countries are on board, with some like Germany and Hungary fearing the economic impact even though civilian killings in Ukraine have increased Europe's resolve to punish the Kremlin.

Russia denies allegations that it has targeted civilians in what President Vladimir Putin calls a "special military operation" to disarm Ukraine.

Here are arguments for and against sanctioning Russian oil.

The case for oil sanctions
Ukraine and EU states including Poland and Lithuania want a ban on Russian oil and gas. Oil is Russia's most lucrative energy export, and blocking it would deprive Moscow of a major revenue stream those countries complain is funding the war.

EU lawmakers on Thursday approved a non-binding resolution for an immediate embargo on Russian energy imports.

Oil and oil products made up more than a third of Moscow's export revenues last year. Currently, Europe spends around $450 million per day on Russian crude oil and refined products, around $400 million per day for gas, and roughly $25 million for coal, according to think-tank Bruegel.

In theory, producers such as Saudi Arabia and the United Arab Emirates have enough spare capacity for Europe to replace the Russian oil it buys, which is roughly half of Russia's total crude exports of 4.7 million barrels per day. However, producer group OPEC+ has so far only committed to incrementally increase output.

The terms of any oil embargo could determine its support among EU states, with options for flexibility including a transition period - like the four-month phase-in agreed for the EU's Russian coal sanctions - or carve-outs for specific products, such as the 10% of Europe's diesel that comes from Russia.

Some countries have suggested halfway measures that would not ban Russian oil purchases, but would withhold some payments for it.

Estonian Prime Minister Kaja Kallas - who supports oil and gas sanctions - last week asked the European Commission to propose skimming off a share of Europe's payments for Russian fossil fuels and placing them in a third-party account instead of sending them to Moscow, effectively imposing a tariff on such imports.

The case against oil sanctions
Germany and Hungary are opposed to an immediate oil embargo, which Berlin has said would risk German economic and social stability.

Russia is Europe's biggest oil supplier, providing 26% of EU oil imports in 2020. Europe gets roughly a third of its gross available energy from oil and petroleum products, in sectors from transport to chemicals production.

Sanctioning Russian supply could push up already-high oil prices, which soared to a 14-year peak last month. Germany, Sweden, France and Italy have announced subsidies to shield motorists from high prices - moves criticized by climate campaigners as fossil fuel subsidies.

Brent crude prices could be around 21% higher on average in 2022 under EU oil sanctions, compared with a reference case where voluntary "self-sanctioning" by companies caused a smaller shut-in of Russian supplies, according to the Oxford Institute for Energy Studies.

The price impact of sanctions would also depend on factors including releases of strategic oil reserves aimed at cooling prices.

Brent crude futures were last trading 0.8% up on Friday at $101.36.

Another concern is that EU oil sanctions could see Russia retaliate by also cutting off the 40% of EU gas it supplies.

Gas sanctions are seen as the last resort in the EU's package of potential energy measures, because of the dependence of European industries and home heating on the fuel, plus the challenges Europe would face to replace Russian supply in a tight global gas market and with limited infrastructure for importing more liquefied natural gas.

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Climate Change Imperils Drought-Stricken Morocco’s Cereal Farmers and Its Food Supply

A farmer works in a wheat field on the outskirts of Kenitra, Morocco, Friday, June 21, 2024. (AP)
A farmer works in a wheat field on the outskirts of Kenitra, Morocco, Friday, June 21, 2024. (AP)
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Climate Change Imperils Drought-Stricken Morocco’s Cereal Farmers and Its Food Supply

A farmer works in a wheat field on the outskirts of Kenitra, Morocco, Friday, June 21, 2024. (AP)
A farmer works in a wheat field on the outskirts of Kenitra, Morocco, Friday, June 21, 2024. (AP)

Golden fields of wheat no longer produce the bounty they once did in Morocco. A six-year drought has imperiled the country's entire agriculture sector, including farmers who grow cereals and grains used to feed humans and livestock.

The North African nation projects this year's harvest will be smaller than last year in both volume and acreage, putting farmers out of work and requiring more imports and government subsidies to prevent the price of staples like flour from rising for everyday consumers.

"In the past, we used to have a bounty — a lot of wheat. But during the last seven or eight years, the harvest has been very low because of the drought," said Al Housni Belhoussni, a small-scale farmer who has long tilled fields outside of the city of Kenitra.

Belhoussni's plight is familiar to grain farmers throughout the world confronting a hotter and drier future. Climate change is imperiling the food supply and shrinking the annual yields of cereals that dominate diets around the world — wheat, rice, maize and barley.

In North Africa, among the regions thought of as most vulnerable to climate change, delays to annual rains and inconsistent weather patterns have pushed the growing season later in the year and made planning difficult for farmers.

In Morocco, where cereals account for most of the farmed land and agriculture employs the majority of workers in rural regions, the drought is wreaking havoc and touching off major changes that will transform the makeup of the economy. It has forced some to leave their fields fallow. It has also made the areas they do elect to cultivate less productive, producing far fewer sacks of wheat to sell than they once did.

In response, the government has announced restrictions on water use in urban areas — including on public baths and car washes — and in rural ones, where water going to farms has been rationed.

"The late rains during the autumn season affected the agriculture campaign. This year, only the spring rains, especially during the month of March, managed to rescue the crops," said Abdelkrim Naaman, the chairman of Nalsya. The organization has advised farmers on seeding, irrigation and drought mitigation as less rain falls and less water flows through Morocco's rivers.

The Agriculture Ministry estimates that this year's wheat harvest will yield roughly 3.4 million tons (3.1 billion kilograms), far less than last year's 6.1 million tons (5.5 billion kilograms) — a yield that was still considered low. The amount of land seeded has dramatically shrunk as well, from 14,170 square miles (36,700 square kilometers) to 9,540 square miles (24,700 square kilometers).

Such a drop constitutes a crisis, said Driss Aissaoui, an analyst and former member of the Moroccan Ministry for Agriculture.

"When we say crisis, this means that you have to import more," he said. "We are in a country where drought has become a structural issue."

Leaning more on imports means the government will have to continue subsidizing prices to ensure households and livestock farmers can afford dietary staples for their families and flocks, said Rachid Benali, the chairman of the farming lobby COMADER.

The country imported nearly 2.5 million tons of common wheat between January and June. However, such a solution may have an expiration date, particularly because Morocco's primary source of wheat, France, is facing shrinking harvests as well.

The United Nations' Food and Agriculture Organization ranked Morocco as the world's sixth-largest wheat importer this year, between Türkiye and Bangladesh, which both have much bigger populations.

"Morocco has known droughts like this and in some cases known droughts that las longer than 10 years. But the problem, this time especially, is climate change," Benali said.