Bloomberg: Europe is heading for an “energy shock” and recession due to Russian gas

Bloomberg has said that Europe will enter in a major crisis if the crisis of payment of Russian energy imports in rubles will not be settled

The agency said Europe is heading into an “energy shock” and recession due to falling Russian gas imports.

The European Union will propose a ban on Russian oil later this year, with import restrictions gradually imposed until then, according to sources familiar with the matter.

The sources, who have asked for anonymity because the discussions are private, they said the EU will also push for more banks in Russia and Belarus to be cut off from the Swift network system, including Sberbank PJSC. The US and UK had previously imposed sanctions on Sberben, Russia’s largest financial institution.

Sources said a decision on the new sanctions could be made as early as next week in a meeting of union ambassadors. The proposed measures, which would constitute the sixth round of EU sanctions since Russia invaded Ukraine in February have not yet been formally implemented and may change before that happens.

EU sanctions require adoption by all 27 member states and several countries, such as Hungary, have long resisted measures against Russian oil. This week, Bloomberg reported that Germany, which in previously it had been dismissive of the trend, had signaled its blessing for a gradual ban.

German Economy Minister Robert Habeck said Thursday in an interview with public broadcaster ZDF that Berlin would not stand in the way of an oil embargo, but expressed doubts that it was the most effective way to harm President Vladimir Putin.

An oil embargo will greatly increase the stakes in game with Russia as the European Union, Russia’s largest consumer of crude oil and fuel, tries to pressure Putin for his war and arrives in one moment in tensions are already increasing for gas supplies. In 2019, nearly two-thirds of the bloc’s crude oil imports came from Russia.

Other options discussed for reducing Russian oil revenues included price limits, special payment mechanisms, and tariffs. Belarus will be included in the package for its role in assisting the Russian invasion, including staging service for the troops.

Sources said the EU was also considering treating oil shipped via tankers and pipelines in different way.

The measures aim to hit Russia’s revenue from oil exports as much as possible without causing disruption in world markets. Rather than punishment, rising oil prices could boost Moscow’s revenue from sales.

Discussions take place amidst a standoff between the European Union and Moscow over how to pay for gas imports. The European Union has claimed the mechanism that Russia has asked for to pay for supplies in rubles would violate the sanctions of the blockade. Russia says it will stop sending gas to countries that don’t comply.

Poland and Bulgaria have already been shut down for failing to comply with Putin’s new terms, but other countries are confident they can keep gas flowing.

According to the Center for Energy Research, the European Union imported fossil fuels worth 44 billion euros ($ 46 billion) from Russia since the invasion of Ukraine.

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