IS Europe dependent on Russian energy supplies? This question seems to have concluded that the Russian oil supply is no longer needed. With sufficient supplies from Arabian Gulf suppliers, thanks to recent agreements with Qatar and Abu Dhabi, and similar agreements with U.S. suppliers of oil and gas, does it mean the end of any energy crisis facing Europe? Certainly, there are positive signs supporting our point. Oil prices have decreased and begun to stabilize around the $80s level.

Currently, Brent crude is around $77 per barrel, not even reaching the $80 range. With OPEC+ being fully committed to its production quotas, this may indicate lower demand and sufficient oil supply. This could contribute to a stable oil and gas market, potentially mitigating the risk of an energy crisis. The question that needs to be answered today is - how will oil-producing countries manage with such low oil prices, given that they need a minimum of $90 per barrel to balance their annual budgets and expenses? Despite Europe being well protected by both Gulf suppliers and U.S. sources, and the sanctions against Russian oil that have been in place since 2023, petroleum products are still finding their way through.

This is likely due to processing facilities in other parts of the world that handle Russian crude. It is almost impossible to distinguish between petroleum products sourced from Russian oil and those of other crude oils. India has emerged as the biggest supplier of Russian oil to Europe. The European Union imported approximately 1.75 million tons (or 11.3 million barrels) of oil per day from Russia between 2021 and 2023, peaking in 2022. By November 2023, these imports had dropped to below 2 million metric tons.

However, gas imports from Russia remain the highest, accounting for 54 percent of EU gas imports due to the ongoing pipeline connection with Russia and the lack of marine facilities for receiving marine shipments from the Arabian Gulf and the US. Arabian Gulf oil and gas producers are gradually ramping up efforts to replace Russian supplies, either directly or indirectly, such as through the shipment of Russian crude via India. Regarding the recent dip in oil prices to $77 per barrel, the key question is - what action will OPEC+ take in response, especially since most of its members are adhering to their agreed quotas? This raises the possibility of $77 becoming the new norm, potentially setting the stage for revised growth and economic recovery. Oil-producing and exporting countries may need to take measures to address their annual budget deficits in this context. Despite European efforts to reduce reliance on Russian energy, Russia is likely to remain a major player in both the oil and gas markets. Europe may find it challenging to completely sever ties with its principal gas supplier.

By Kamel Al-Harami
Independent Oil Analyst
Email: [email protected]