Four days before the meeting of the “OPEC +” group on the second of next June, the leaders of the European Union will meet today, Monday, and tomorrow, Tuesday, to discuss the sixth package of sanctions against Russia for its invasion of Ukraine.
The Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, called “OPEC +”, are expected to abide by the oil production agreement approved last year to increase production targets in July by 432,000 barrels per day. This represents a rejection of Western calls for faster increases in production in order to curb high prices despite the EU’s plans to impose an embargo on Russian oil.
Group of 7
Western countries, facing record inflation rates that threaten economic growth, have repeatedly asked OPEC+ to speed up their production increases.
The last claimant was the Group of 7 major industrialized countries, which on Saturday urged “OPEC” to help ease supply shortages in global energy markets, and said that “OPEC” can play a key role in this regard.
Russian oil embargo talks
Any additional ban on Russian oil will lead to a shortage of supply in the crude oil market, which is already experiencing pressures on supplies amid increased demand for gasoline, diesel, and jet fuel before the peak demand season.
Today, oil prices rose to their highest level in two months as traders waited to see if the EU would reach an agreement on the Russian oil embargo. Brent crude futures for July rose more than a dollar to $120.50 a barrel. While US West Texas Intermediate crude futures jumped a dollar to $116.10 a barrel, continuing the strong gains made last week, according to Reuters data.
On Sunday, representatives of the 27 member states of the EU discussed a new proposal that would temporarily exempt a major oil pipeline for Hungary from the bloc’s gradual embargo on Russian oil, in an attempt to remove obstacles to a sixth European sanctions package against Moscow.
They will continue their talks today, with pipeline deliveries allowed before the summit in the afternoon.
This proposal, submitted by the European institutions and France, which holds the rotating presidency of the EU, stipulates the imposition of a ban on Russian oil delivered by ships by the end of the year, with the exception of what is “currently” being transported through the “Drogba” pipeline, which supplies Hungary, Slovakia and the Czech Republic in particular. If agreed, Hungary, Slovakia, and the Czech Republic will be allowed to continue receiving Russian oil through this pipeline for some time until alternative supplies are arranged.
Hungary’s opposition
Hungary had previously rejected the deal. The country depends on Russian oil for meeting 65 percent of its needs, so the EU countries proposed in previous negotiations to grant Hungary an exception to ban imports of Russian oil for an additional two years, so that it could dispense with those imports.
However, Hungary requested extending the proposed period to 4 years, in addition to a request for 800 million euros (860 million dollars) in financing to convert its oil refineries to work with types of oil other than Russian.
And if the EU cannot convince Hungary of the sanctions plan, it will be a major blow to the bloc’s united stance against Russia and an embarrassment to the European Commission, which announced the oil embargo plan weeks ago.
