Less than three months have passed since December 5th, when the European Union is expected to ban imports of Russian crude by sea.
But in a rather embarrassing last-minute development, European countries are frantically importing Russian crude in the hope of filling their tanks when the ban takes effect.
European imports of Russian crude are still above 1m b/d, continuing last month's high.
Russia currently exports about 3.32 million barrels a day by sea, media statistics show, meaning a third of that is destined for Europe. In the first week of this month, Russian crude oil exports to northern European countries rose significantly.
The heavy stockpiling reflects how the European Union's oil ban announced in June has not dented European countries' appetite for Russian crude, a sentiment echoed Monday by Shri Hardeep Singh Puri, India's oil minister 39bet-xì dách-phỏm miền bắc-tiến lên miền bắc-xóc đĩa-game bắn cá.
Puri told the press:
European countries import more Russian crude oil in an afternoon than we do in a quarter. I'd be surprised if that wasn't the case.
The reason for Europe's frantic hoarding is to prepare for the possibility that oil prices, while under pressure now, will rebound at the worst of Europe's economic downturn if the ban goes into effect.
It is worth noting that, although in the European electricity market marginal cost pricing mechanism, gas prices and electricity prices are more closely related. But earlier this year, as gas prices soared, some European utilities switched to generating electricity from crude oil. So until natural gas prices return to normal, generating electricity from crude oil is still seen as a viable option.
And there are more alternative sources of crude oil than natural gas. Middle Eastern countries are keen to export crude to Europe, as are Opec members Nigeria and Angola. Of course, they could set an export price for oil, and it's unclear if Europe will cap that as well.
Not only is Europe stockpiling oil because of its energy security concerns, its demand for all fossil fuels is rising fast. It has also led to speculation that Europe's plans to cut carbon emissions have taken a back seat.
Russia is looking more to Asia despite surging demand from Europe.
While Europe is hoarding Russian crude, finance ministers from the Group of Seven industrialized nations last week endorsed the idea of capping the price of Russian crude.
In this case, oil major Russia is more inclined to explore the Asian market.
Russia has approached several Asian countries to offer long-term oil contracts at deep discounts of up to 30 percent, Wall Street sources have previously mentioned.
The plan would allow third parties to buy Russian crude more easily at low prices set by Western countries. Russia could also lock in alternative long-term oil buyers in Europe through long-term contracts.