AFP

The EU is working on broadening sanctions on Russia to include oil and gas embargoes but such measures would take “several months”,  European officials told AFP on Friday.

The bloc last week announced a ban on Russian coal in a first step against Russian energy exports — together, Moscow’s main hard currency earner. 

But the coal sanction only kicks in from mid-August, and would hit around eight billion euros ($8.7 billion) in Russia’s sales abroad, annually. 

Russian oil and gas sales to the EU account for a far higher amount of revenue: between a quarter of a billion to a billion euros per day, per different estimates.

Public and political opinion in the EU is swinging towards a total energy ban as Moscow’s war in Ukraine grinds on and yields discoveries of atrocities.

An EU official involved in discussions on cutting Russian energy imports said the European Commission is “thinking about options”. Commission chief Ursula von der Leyen has already come out publicly in favour of targeting Russian oil.

But, the official said, “adopting measures on oil means undoing existing contracts, finding alternatives and preventing circumvention”.

“That can’t be don’t overnight. It requires at least several months.”

– Outrage over war –

Building EU outrage over the war is sweeping aside hesitation by the member states reliant on Russian oil and gas, such as the bloc’s biggest economy Germany, and Italy, Greece and Austria.

Some EU countries, such as Lithuania, have already announced national bans on Russian oil and gas.

One option to quickly stall revenues going to Russia’s war could be to pay for energy imports through an escrow account, which Moscow wouldn’t be able to touch until a postwar settlement.

But there is also thinking about how Russia might retaliate, by cutting supplies to Europe, or — as President Vladimir Putin said this week — selling more to Asia.

In any case, it’s clear that European industry and consumers will have to consume less oil and gas — something economists call “demand destruction”.

“Cutting demand will have an impact with price hikes,” another EU official said, echoing comments from several ministers in the bloc.

They noted that the EU’s main ally in the sanctions, the US — which a month ago imposed its own ban on Russia’s energy imports — is leery of petrol price rises for American drivers.

“What’s more, if Russia sells oil snubbed by the Europeans to other buyers, the sanctions won’t work,” one EU official said.

The Europeans and Americans are looking to avoid the sanctions being weakened by China and India. 

Brussels is telling Beijing and New Delhi the EU would find it “difficult to accept partners who undermine the sanctions,” one EU diplomat said.

– EU unity –

At the same time, the EU is intent on preserving unity among its 27 member states as it navigates sensitive national interests on energy.

Yet determination to target Russian energy was evident at the last meeting of EU foreign ministers on Monday in Luxembourg.

“The European Union is spending hundreds of millions of euros on importing oil from Russia — that is certainly contributing to financing this war,” Irish Foreign Minister Simon Coveney said at that meeting.

“In our view, we need to cut off that financing of war, even though it creates huge challenges and problems for the EU to solve together.” 

EU foreign policy chief Josep Borrell said after the meeting that “nothing is off the table, including sanctions on oil and gas” but no decision was yet made.

Borrell said that, in 2021, the EU paid Russia $80 billion (74 billion euros) for oil and $20 billion for gas — which would work out as an average of 250 million euros per day.

Other European sources, including MEPs, have spoken of Russian fossil fuel imports to the value of up to 700 million euros per day. 

Figures vary depending on what period of time is being looked at, contract prices versus market spot prices, and currency valuations.

A spike in energy demand as Covid-19 restrictions were eased made energy prices jump even before the war in Ukraine.

The International Energy Agency said that, in 2021, the EU  imported 155 billion cubic metres of gas from Russia, representing 45 percent of its gas imports.

The World Economic Forum says the EU gets over a quarter of its imported crude from Russia, but volumes have been dropping over the past decade.

Cash-strapped Sri Lanka imposed fuel rationing on Friday in another worsening of the economic crisis that has sparked widespread demonstrations calling for President Gotabaya Rajapaksa’s resignation.

The state-run Ceylon Petroleum Corporation (CPC), which accounts for two-thirds of the retail fuel market, said it would limit the quantities drivers can buy, and banned pumping into cans altogether to prevent motorists stocking up on petrol or diesel in fear of further rationing.

The maximum for motorcycles was set at four litres of petrol, with three-wheelers allowed five litres, the CPC said. Private cars, vans and SUVs were allowed up to 19.5 litres of either petrol or diesel.

Most pumping stations were already out of petrol, while the few that remained open saw long queues. At least eight people have died while waiting in fuel lines since last month.

Energy ministry officials said they expected the country’s other fuel retailer, Lanka IOC — the local unit of Indian Oil Corporation — to follow suit. 

There was no immediate comment from the Lanka IOC, which accounts for the remaining one third of the market.

The island nation is in the grip of its worst economic crisis since independence in 1948, with severe shortages of essential goods and regular blackouts causing widespread misery.

The country’s main cooking gas retailer Litro Gas said it was completely out of stock, but hoped to get new supplies by Monday to resume distribution.

The state-owned firm said its chairman, Theshara Jayasinghe, a strong ally of Rajapaksa, had resigned on Thursday over the “prevailing situation” in the country.

Tens of thousands of people kept up a protest outside Rajapaksa’s office for a seventh straight day Friday demanding he quit over the economic hardships suffered by the country’s 22 million residents.

Sri Lanka’s economic meltdown began after the coronavirus pandemic torpedoed vital revenue from tourism and remittances. 

The government has urged citizens abroad to donate foreign exchange to help pay for desperately needed essentials after announcing a default on its entire external debt.

It has announced it will open negotiations with the International Monetary Fund to seek a bailout.

Chinese automakers warned they may have to put the brakes on production if Covid-19 lockdowns in Shanghai persist, with a top Huawei executive also sounding the alarm Friday about snarled supply chains.

The restrictions have kept Shanghai’s 25 million residents mostly at home for weeks, forcing manufacturers to halt operations and making China’s GDP growth target of around 5.5 percent look increasingly difficult to achieve.

Shipping giants also warned that Shanghai’s lockdown was snarling up the world’s busiest container port.

Covid outbreaks across the country and the associated reductions in economic activity have already hit the auto industry hard, with car sales dropping 10.5 percent in March.

“If supply chain companies in Shanghai and its surrounding areas cannot find a way to dynamically resume work and production, all original equipment manufacturers may have to stop production in May,” XPeng chief He Xiaopeng said Thursday on social media.

XPeng has been touted as a Chinese challenger to US electric car giant Tesla, and its chief said that businesses were hoping for more support from the authorities to navigate the Covid closures.

A top executive at Chinese tech giant Huawei — which has started to work with domestic auto manufacturers in the intelligent vehicle sector — echoed the comments on Friday and warned the clock was ticking.

“If Shanghai continues being unable to resume work and production, from May, all tech and industrial players involving the Shanghai supply chain will completely shut down, especially the auto industry!” Richard Yu, head of Huawei’s consumer and auto segment, said on the social media platform WeChat.

Huawei sold its first 3,000 electric vehicles with the company’s HarmonyOS operating system in March.

The group has been working with automakers to provide intelligent auto components, but does not make cars on its own.

– Global brands affected –

The Covid curbs have affected global brands as well, with Volkswagen saying it has been “severely hit by Covid-19 outbreaks in Changchun and Shanghai”, where the German titan’s Chinese joint ventures are located.

The firm is “temporarily unable to meet high customer demand,” said Volkswagen Group China CEO Stephan Wollenstein Thursday.

China’s zero-Covid policy has been increasingly strained as the country battles its highest number of infections since the start of the pandemic.

Volkswagen said around 20 percent of its dealers were forced to temporarily close in March alone as a result of lockdowns.

And Tesla’s multi-billion-dollar “gigafactory” in Shanghai — which the company calls its main export hub — has also been reportedly shut.

Chinese electric vehicle maker Nio said last weekend that it had suspended vehicle production, as business partners in virus-hit areas such as Jilin and Shanghai halted operations.

Containers have been piling up at the port of Shanghai as the city faces limited trucking capacity, and shipping giant Maersk said in a statement Thursday it would stop taking new bookings for refrigerated containers and hazardous cargo into the city.

It cited “yard congestion in Shanghai terminals” for the move.

Another shipping company, Ocean Network Express, said that plug slots for keeping refrigerated containers cool were “highly stressed”.

Asian markets dipped Friday after a negative lead from Wall Street, with investors around the world worried about surging inflation.

Central banks in several major economies including the United States, Canada and Britain have already started raising interest rates to contain prices, but the European Central Bank on Thursday kept its stimulus plans and rates unchanged.

That sent the euro plunging to a near two-year low, but eurozone stocks were boosted while Wall Street retreated ahead of the Easter holidays.

The mood was subdued in Asia too, where only a handful of markets were open on Good Friday.

The Nikkei 225 closed 0.3 percent lower with Wall Street’s woes depressing sentiment.

Analysts had expected China’s central bank to cut interest rates on Friday to provide support to the Covid-stricken economy.

But the People’s Bank of China left them unchanged.

“That’s somewhat surprising given the sharp economic downturn and recent calls from China’s leadership for monetary support,” Julian Evans-Pritchard of Capital Economics said in a note.

“It underscores the reluctance of the central bank to aggressively ease policy. But we think it will have little choice but to do more before long.”

Shanghai was down 0.5 percent at the close.

Russia’s invasion of Ukraine has added to the uncertainty about the global economic recovery from the Covid-19 pandemic.

This was reflected in statements from major banking executives in the United States, who described the American economy as solid but warned about the impact of the Ukraine conflict and the measures central banks such as the US Federal Reserve will take to control inflation.

“We don’t think there’s going to be a recession,” Julian Emanuel, chief equity strategist at Evercore ISI, told Bloomberg television.

“We don’t think the Fed is going to break the glass. But the problem is investors aren’t in that mindset quite yet.”

European and US markets are closed on Friday.

– Energy, food shocks –

Russia is a major global oil and gas supplier, and — along with Ukraine — is also a key player in the grain sector.

The conflict has shaken markets for these commodities, and the impact has been felt from the Middle East to South America.

In Yemen, there are fears of food shortages with the war-ravaged nation already on the edge of famine.

In Argentina, a strike by grain transporters has paralysed farming exports — haulers are unhappy with the rates they are paid, pointing to the spike in fuel prices because of the Ukraine crisis.

The war has sent oil prices soaring, with reports swirling about further energy sanctions on Russia.

Both main contracts have hovered above the $100 per barrel mark in recent days.

“There are no surprises here as oil continues to march higher, with global supply shortage outweighing concerns about slower demand in China,” Stephen Innes of SPI Asset Management said in a note.

– Key figures around 0745 GMT –

Tokyo – Nikkei 225: DOWN 0.3 percent at 27,093.19 (close)

Shanghai – Composite: DOWN 0.5 percent at 3,211.24 (close)

Hong Kong – Hang Seng Index: Closed for a holiday

Euro/dollar: DOWN at $1.0808 from $1.0832 at 2100 GMT Thursday

Pound/dollar: DOWN at $1.3068 from $1.3076

Euro/pound: DOWN at 82.70 pence from 82.77 pence

Dollar/yen: UP at 126.46 from 125.87

Brent North Sea crude: UP 2.7 percent at $111.70 per barrel at 2100 GMT Thursday

West Texas Intermediate: UP 2.6 percent at $106.95 per barrel at 2100 GMT Thursday

New York – Dow: DOWN 0.3 percent at 34,451.23 (close)

London – FTSE 100: UP 0.5 percent at 7,616.38 (close)

— Bloomberg News contributed to this story —

Chinese auto makers may have to put the brakes on production if strict Covid-19 curbs in Shanghai persist, said the founder of electric carmaker XPeng, as a prolonged lockdown of the economic hub menaces supply chains.

The lockdown has kept Shanghai’s 25 million residents mostly at home, forcing manufacturers to halt operations, and has made China’s GDP growth target of around 5.5 percent look increasingly difficult to achieve.

Covid outbreaks across the country and the associated reductions in economic activity have already hit the auto industry hard, with car sales dropping 10.5 percent in March.

“If supply chain companies in Shanghai and its surrounding areas cannot find a way to dynamically resume work and production, all original equipment manufacturers may have to stop production in May,” XPeng chief He Xiaopeng said Thursday on social media.

XPeng has been touted as a Chinese challenger to US electric car giant Tesla, and its chief said that businesses were hoping for more support from the authorities to navigate the Covid closures.

Volkswagen also said it has been “severely hit by Covid-19 outbreaks in Changchun and Shanghai”, where the German titan’s Chinese joint ventures are located.

The firm is “temporarily unable to meet high customer demand”, said Volkswagen Group China CEO Stephan Wollenstein on Thursday, adding that he hoped the production delays could be made up in the coming months.

China’s zero-Covid policy has been increasingly strained as the country battles its highest number of infections since the start of the pandemic.

Volkswagen said around 20 percent of its dealers were forced to temporarily close in March alone as a result of lockdowns.

Tesla’s multi-billion-dollar “gigafactory” in Shanghai — which the company calls its main export hub — has also been reportedly shut.

Chinese electric vehicle maker Nio said last weekend that it had suspended vehicle production, as business partners in virus-hit areas such as Jilin and Shanghai halted operations.

Asian markets dipped Friday after a negative lead from Wall Street, with investors around the world worried about surging inflation.

Central banks in several major economies including the United States, Canada and Britain have already started raising interest rates to contain prices, but the European Central Bank on Thursday kept its stimulus plans and rates unchanged.

That sent the euro plunging to a near two-year low, but eurozone stocks were boosted while Wall Street retreated ahead of the Easter holidays.

The mood was subdued in Asia too, where only a handful of markets were open on Good Friday.

The Nikkei 225 closed 0.3 percent lower with Wall Street’s woes depressing sentiment.

Shanghai was down 0.7 percent in afternoon trade.

Russia’s invasion of Ukraine has added to the uncertainty about the global economic recovery from the Covid-19 pandemic.

This was reflected in statements from major banking executives in the United States, who described the American economy as solid but warned about the impact of the Ukraine conflict and the measures central banks such as the US Federal Reserve will take to control inflation.

“We don’t think there’s going to be a recession,” Julian Emanuel, chief equity strategist at Evercore ISI, told Bloomberg television.

“We don’t think the Fed is going to break the glass. But the problem is investors aren’t in that mindset quite yet.”

– Energy, food shocks –

Russia is a major global oil and gas supplier, and — along with Ukraine — is also a key player in the grain sector.

The conflict has shaken markets for these commodities, and the impact has been felt from the Middle East to South America.

In Yemen, there are fears of food shortages with the war-ravaged nation already on the edge of famine.

In Argentina, a strike by grain transporters has paralysed farming exports — haulers are unhappy with the rates they are paid, pointing to the spike in fuel prices because of the Ukraine crisis.

The war has sent oil prices soaring, with reports swirling about further energy sanctions on Russia.

Both main contracts have hovered above the $100 per barrel mark in recent days.

“There are no surprises here as oil continues to march higher, with global supply shortage outweighing concerns about slower demand in China,” Stephen Innes of SPI Asset Management said in a note.

– Key figures around 0700 GMT –

Tokyo – Nikkei 225: DOWN 0.3 percent at 27,093.19 (close)

Shanghai – Composite: DOWN 0.7 percent at 3,204.50

Hong Kong – Hang Seng Index: Closed for a holiday

Euro/dollar: DOWN at $1.0806 from $1.0832 at 2100 GMT Thursday

Pound/dollar: DOWN at $1.3055 from $1.3076

Euro/pound: FLAT at 82.77 pence

Dollar/yen: UP at 126.68 from 125.87

Brent North Sea crude: UP 2.7 percent at $111.70 per barrel at 2100 GMT Thursday

West Texas Intermediate: UP 2.6 percent at $106.95 per barrel at 2100 GMT Thursday

New York – Dow: DOWN 0.3 percent at 34,451.23 (close)

London – FTSE 100: UP 0.5 percent at 7,616.38 (close)

— Bloomberg News contributed to this story —

Asian markets dipped in early trade Friday after a negative lead from Wall Street, with investors around the world worried about surging inflation.

Central banks in several major economies including the United States, Canada and Britain have already started raising interest rates to contain prices, but the European Central Bank on Thursday kept its stimulus plans and rates unchanged.

That sent the euro plunging to a near two-year low, but eurozone stocks were boosted, but Wall Street retreated ahead of the Easter holidays.

The mood was subdued in Asia too, where only a handful of markets were open on Good Friday.

The Nikkei 225 slid 0.7 percent with Wall Street’s woes depressing sentiment.

The Tokyo market is likely to be “dominated by sell orders as investors are disheartened by falls in US shares,” Mizuho Securities said in a note.

Shanghai dropped 0.2 percent.

Russia’s invasion of Ukraine has added to the uncertainty about the global economic recovery from the Covid-19 pandemic.

This was reflected in statements from major banking executives in the United States, who described the American economy as solid but warned about the impact of the Ukraine conflict and the measures central banks such as the US Federal Reserve will take to control inflation.

“We don’t think there’s going to be a recession,” Julian Emanuel, chief equity strategist at Evercore ISI, told Bloomberg television.

“We don’t think the Fed is going to break the glass. But the problem is investors aren’t in that mindset quite yet.”

– Energy, food shocks –

Russia is a major global oil and gas supplier, and — along with Ukraine — is also a key player in the grain sector.

The conflict has shaken markets for these commodities, and the impact has been felt from the Middle East to South America.

In Yemen, there are fears of food shortages with the war-ravaged nation already on the edge of famine.

In Argentina, a strike by grain transporters has paralysed farming exports — haulers are unhappy with the rates they are paid, pointing to the spike in fuel prices because of the Ukraine crisis.

The war has sent oil prices soaring, with reports swirling about further energy sanctions on Russia.

Both main contracts sat above the $100 per barrel mark.

“There are no surprises here as oil continues to march higher, with global supply shortage outweighing concerns about slower demand in China,” Stephen Innes of SPI Asset Management said in a note.

– Key figures around 0320 GMT –

Tokyo – Nikkei 225: DOWN 0.7 percent at 26,995.86

Shanghai – Composite: DOWN 0.6 percent at 3,204.96

Hong Kong – Hang Seng Index: Closed for a holiday

Euro/dollar: DOWN at $1.0801 from $1.0832 at 2100 GMT

Pound/dollar: DOWN at $1.3063 from $1.3076

Euro/pound: DOWN at 82.67 from 82.77 pence

Dollar/yen: UP at 126.39 from 125.87 at 2100 GMT

Brent North Sea crude: UP 2.7 percent at $111.70 per barrel

West Texas Intermediate: UP 2.6 percent at $106.95 per barrel

New York – Dow: DOWN 0.3 percent at 34,451.23 (close)

London – FTSE 100: UP 0.5 percent at 7,616.38 (close)

— Bloomberg News contributed to this story —