www.zerohedge.com BY TYLER DURDEN
Excerpted from Maartje Wijffelaars, Elwin de Groot and Erik-Jan van Harn of Rabobank (full note available to ZH professional subscribers in the usual place).
Summary
- On Tuesday night EU leaders agreed to ban all Russian seaborne oil imports
- The ban, amid already high inflation and intense supply chain pressure, will push the Eurozone into a recession; this confirms our views expressed earlier this year
- We expect the Eurozone economy to enter a recession by the end 2022/early 2023
- Helped by carry over effects we still expect the Eurozone economy to grow by 2.2% in 2022, yet to contract with 0.1% in 2023
- The ban will not lead to lasting energy shortages, but it will take time before Russian oil imports are replaced and oil prices will almost certainly trend higher
- Our forecast is subject to quite some uncertainty, especially when it comes to the timing and depth of the recession. But, importantly, a grind down is in the works, with neither the ECB nor governments in the position to prevent that
On Tuesday night, EU leaders agreed to ban all Russian seaborne oil imports. The sixth sanction package, including the details, still needs to be officially signed off, but based on earlier statements, import of Russian crude oil via seaborne shipments is set to be barred from the end of this year. The ban on seaborne import of petroleum products should then become effective about two months later. A âtemporaryâ exception is being made for pipeline imports, to accommodate concerns over energy security for Hungary, Slovakia and the Czech Republic. When taking into account that Germany and Poland have said to cut Russian oil imports regardless of the exemption, the current agreement effectively means that about 90% of crude oil imports from Russia would be phased out by the end of the year- which represents around one quarter of total annual crude oil imports in the EU in recent years. It has not yet been agreed how long the exclusion of pipeline oil will last. Importantly, the package will also foresee in a provision to limit re-exports of Russian crude arriving via pipelines and petroleum products based on Russian crude oil.
