Ukraine halts oil deliveries to central Europe due to sanctions on Russia.

 

The receiver station of the Druzhba pipeline between Hungary and Russia. Reuters. 

Ukraine has halted oil deliveries to central Europe, citing sanctions on Russia as the reason. Reuters. The sanctions prevented Ukraine for accepting Russian transit fees, forcing them to cut off the oil. The flow on the southern Druzhba pipeline serves Slovakia, Hungary and the Czech Republic, all of which are almost totally dependent on Russian oil and are unable to easily import oil from overseas. The northern Druzhba pipeline, that supplies Germany and Poland, has remained unaffected. Oil prices jumped on the news before stabilizing later in the day.  

My Comment:

This is terrible news for central Europe and yet another own goal by the EU. None of this has any reason to be happening and it's all on Europe for imposing these sanctions in the first place. And these central European countries are going to pay a terrible price. 

These countries also have very little in the way of options to find other sources of oil. All three countries are landlocked and will have to work through other countries to get their oil. Slovakia is the worst off since they get their oil from Hungary which is affected by this oil shutdown. 

Many news articles are blaming this on Russia but I don't think that's fair. I also don't really think that that Ukraine is to blame either. This is all on Europe since they are the ones that put sanctions into place. Ukraine and Russia seem to have no problem in allowing Russian oil to go to Europe. Only Europe itself has a problem with that. 

The other problem is that this will almost certainly help Putin and Russia. He might sell less oil to central Europe but remember, it's only one section of one pipeline that is being cut off. These countries being cut off from Russian oil will force them to supply from other sources, which will increase demand on those sources which will lead to higher oil prices. Since high oil prices have basically funded the Ukraine war for Russia, it's not a loss for them. 

Who will be damaged for this is central Europe. Remember, high oil prices affect basically everything that has to be transported, so that means inflation is going to increase in these countries. It may even lead to shortages which can easily shut down economic activity. This is going to put extreme pressure on these countries to lift these sanctions. 

And at this point, why wouldn't they? They aren't doing anything to harm Russia, indeed, they are helping them. It is going to massively hurt these countries and raise oil prices across the board. To keep them is just stupid but that seems to be the running them with western leadership these days...