A war of nerves begins over Russian oil. Europe will win it

Drivers should fuel up and anticipate things to come with just the right amount of fatalism. The price of diesel broke the line 38 crowns, petrol 36 crowns per liter. Which sounds almost like a fairy tale to anyone, who remembers, as he circled the pumper totems in the spring in hope, that he will find a place, where he would feed his diesel for less than half a hundred. But everything can change soon. European Union – and subsequently the G7 group of economically advanced countries plus Australia – they agreed, that maximum price, they are already willing to pay for Russian oil, will do 60 dollars per barrel.

It starts out so classic “prisoner's dilemma”, in which the opponents consider their chances during cooperation or, conversely, dueling. The European Union is betting on it, that the Russian president will succumb to the pressure. He, on the other hand, can calculate with it, that the sale of oil would be completely cut off. Which, of course, would severely affect the states dependent on its supplies, however, he would lose key income in such a move.

If, in the end, both competing parties decide to cooperate under European conditions, it will be more beneficial for the West than for Russia. And in the long run, it will also lead to the energy independence of the free world from the aggressor.
On the pan of an oil scale

There is really a lot at stake, and the twenty-seven-year-old searched for a common language very hard. Initially, the amount was worked out in Brussels 65 until 70 dollars per barrel, i.e. a higher amount, than what Russian oil is trading for today. Which was unacceptable to the Poles and the Baltic States, as Moscow would continue to collect the full market price – and thus obtained considerable means to finance its aggression towards the surrounding world.
The result of the protest is a rather complex agreement about a lot of unknowns. She finally set the ceiling on those mentioned 60 dollars. Surely it could have been less – knowing that, that the production cost per barrel is somewhere around 20 dollars, Warsaw and Tallinn, for example, requested, for the ceiling to be set at 30 dollars. However, even the current decision will eventually be felt by Russia.

That's why, that the European Union ceases to exist with immediate effect, G7 countries and Australia to import Russian oil by sea. Moreover, they will not insure or lend tankers, which would transport the raw material at a price above the set ceiling. Which is a very important step, which significantly complicates the Kremlin's export of oil to other markets.

What, on the other hand, is postponed, is a ban on the import of Russian oil into the Czech Republic, Hungary and Slovakia. All three countries were exempted, thanks to which the raw material can flow to them through the Druzhba pipeline until the beginning of February. Unless Putin decides to cut them off immediately.

Because of everything described above, it is not very likely, that fuel prices will remain at their current level throughout the winter. However, it is valid, that Europe has moved towards independence from an aggressive Russia, and with the appropriate level of solidarity and savings, it can cope with difficulties, which flow from it, overcome.
Although Putin's spokesman, Dmitry Peskov, Moscow notified ahead of time, that they will not agree to any price ceiling, but he desperately needs the money now. And even at 60 dollars per barrel, she would still collect quite a few.
However, Poland and the Baltic countries managed to enforce the rule, according to which the set limit will be revised every two months as follows, to be at least five percent below the market price. Mentioned 60 dollars seems to represent only a kind of initial excavation, whose level the West will try to push down, as far as the situation allows.

No one knows that at the moment, as the Kremlin will ultimately decide. In any case, he only has a limited amount of time, during which the Central European countries have a chance to make a significant impact in terms of energy. This can be modeled in the case of the Czech Republic. The government of Petr Fiala (ODS) already managed to agree on the capacity expansion of the TAL pipeline, which leads to us from Trieste, Italy. But this pipeline will be able to completely replace deliveries from Druzhba only sometime in the year 2025.
Forever and not a day longer

At the same time, the Druzhba pipeline seemed to be a symbol of the eternal energy alliance between Europe and Russia. Already during the Cold War, Western companies were also involved in its construction, and in 1962 delivered the first delivery to what was then Czechoslovakia “black gold”. Fungovat nepřestal ani po spektakulárním pádu komunismu a rozpadu Sovětského svazu. Německo i mnohé další evropské země pak svoji ekonomickou prosperitu založily právě na dodávkách levných energií z Východu.
Tento po dekády upevňovaný řetěz však Vladimir Putin nyní během několika měsíců zničil. A to nadobro. I kdyby zítra vyhlásil mír a stažení ruských vojsk z Ukrajiny, Evropa už investovala obří sumy do budování LNG terminálů, rozšiřování plynovodů, ropovodů i další energetické infrastruktury, jež ji má chránit před vrtošivým a nevypočitatelným Ruskem. Což je proces, which even the dumping price tag hung on a barrel of Russian oil can no longer reverse.

Europe has already managed to secure gas for this winter, now it faces the task of finishing the game for oil. Perhaps Vladimir Putin will still be able to achieve this in it, to make people's eyes roll a few times at the pumping totems, but even that pays off in the end. As we can see, nothing was more expensive in the end than cheap oil and gas from the Kremlin.

Sourse