Seeming to Acknowledge Criticism Over Covering Russia's War Costs
Securing Alternative Oil Import Sources Key... WTI Rises 3.3%
[Asia Economy Reporter Hyunwoo Lee] Germany, which had opposed the European Union (EU)-level ban on Russian oil, has reportedly reversed its position and agreed to a phased ban. With expectations that the EU's ban proposal will be announced as early as next week, international oil prices showed a rise of over 3%.
On the 28th (local time), the Wall Street Journal (WSJ), citing EU officials, reported, "The German government has withdrawn its opposition to the ban on Russian oil," adding, "Negotiations are currently underway on a phased ban plan, and a decision could be made as early as next week." It is known that the German government will join the EU's ban on Russian crude oil if sufficient time is provided to find alternative supply sources.
The change in Germany's stance is interpreted as a response to increasing domestic and international criticism that continued imports of Russian oil are funding the war efforts of Vladimir Putin's regime. According to the WSJ, EU member states still import about 3 to 3.5 million barrels of Russian oil per day, with over $400 million flowing to Russia daily from these payments.
As Germany, which had opposed a comprehensive EU ban on Russian crude oil, reversed its position, competition among EU countries to secure alternative oil import sources is expected to intensify, leading to a rise in international oil prices. On this day, West Texas Intermediate (WTI) crude oil prices on the New York Mercantile Exchange (NYMEX) closed at $105.36 per barrel, up $3.34 (3.27%) from the previous session. Brent crude traded on the London ICE exchange also rose 2.20% to $107.26 compared to the previous day.
Once the EU officially announces the oil ban, discussions on a natural gas ban are also expected to accelerate. Germany, which has a very high dependence on Russian gas, had opposed a natural gas ban due to concerns over economic collapse. However, with active alternative imports of liquefied natural gas (LNG) from the United States and other regions, its position is reportedly changing.
According to CNN, Germany's dependence on Russian natural gas was 55% immediately after Russia's invasion of Ukraine on February 24 but has now decreased to 35%. The German government plans to reduce its dependence on Russian gas to below 30% by the end of the year and is reviewing measures to curb natural gas usage and implement rationing. CNN reported that Germany aims to increase gas reserves to over 90% of facility capacity by early December.
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