The G-7, the EU and Australia implemented on Dec. 5 a cap on Russian oil prices.
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Sanctions imposed on Russian crude oil have so far “failed completely” and new price caps could prove immaterial as well, analysts told CNBC.
The European Union is planning to ban imports of refined petroleum products from Russia, including diesel and jet fuel, from Sunday.
The 27-member bloc has already banned the purchase and import of sea-borne Russian crude oil since December.
In addition, the bloc — along with its allies in the Group of 7 and Australia — has set a price cap on Russian seaborne crude oil, which bars the use of Western-supplied maritime insurance, finance and other services unless they are sold below $60 per barrel.
They are part of global efforts to curb Moscow’s ability to raise funds for its war in Ukraine.
The price cap “was invented by bureaucrats with finance degrees. None of them really understand oil markets,” Paul Sankey, president and lead analyst at Sankey Research, told CNBC’s “Street Signs Asia” on Thursday.
“Its been a total bomb, it has failed completely.”
Sankey underlined it has been tough for oil markets because Russian oil supply hasn’t really been interrupted and “they’ve sustained exports at high levels.”
“I heard it from a great source that the Saudis have been asking around as to how come Russian oil is still flowing,” he said.
“That brings the question of what will happen with the sanctions coming up on products, because it just doesn’t seem to work.”
Even though volume has remained robust, the price of Russia’s Urals oil blend has fallen since before the war. Average price for Russia’s Urals oil blend was $49.48 per barrel in January this year, according to Reuters which quoted the finance ministry. That’s below the price cap of $60 set by the EU and G-7, and down 42% from January last year, according to Reuters.
Ahead of the proposed price caps on Russia’s refined products on Feb. 5, member states had yet to agree on a price cap, according to Reuters. It is hoped that a deal can be reached by Friday.
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Price cap on refined oil products
Still, Vandana Hari, founder of analytics firm Vanda Insights, said she too was skeptical about the upcoming restrictions on Russian refined oil products.
“The crude price cap was pretty inconsequential,” Hari told CNBC’s “Squawk Box Asia” on Thursday.
“I think the refined product caps that they’re planning — about a $100 [per barrel] for diesel and clean products and perhaps around $45 for dirty fuels like fuel oil — are probably going to be immaterial as well.”
Russian oil will find its way into the markets that are “still welcoming it” like China and India, according to Hari.
“China and India have benefited quite a big deal last year from heavily discounted Russian crude prices and the same’s going to happen to Russian refined products,” Hari noted, although it could be more complicated for Moscow to find markets for such products, she added.
Both China and India have increased their purchases of Russian oil in the wake of Moscow’s invasion of Ukraine, benefiting from discounted rates.
Sankey further noted “oil friendships are greasy” and there’s a lot of different ways to move Russian oil around the world bypassing the price caps.
“One of the things people have highlighted is look at Malaysian oil. Its crude oil exports to China is at 1.5 million barrels a day,” said Sankey. “Malaysia only produces 400,000 barrels a day. I don’t think that’s Malaysian crude. So there’s plenty of stuff moving around outside these … theoretical caps. “
China reopening
Separately, Hari said China’s sudden reopening is unlikely to move the needle on oil prices in the near term.
Hari highlighted she does not believe oil prices will hit $100 per barrel anytime soon as a result of China’s reopening, but it could happen more gradually.
There’s still a high degree of uncertainty around China’s oil demand, she added.
“The initial boost in Chinese demand is obvious. We are seeing a lot of travel happening domestically, internationally… that’s positive for jet fuel. But when does the Chinese economy actually pick up momentum again? I think that’s a big question.”
Wind energy powered 20% of all electricity consumed in Europe (19% in the EU) in 2024, and the EU has set a goal to grow this share to 34% by 2030 and more than 50% by 2050.
To stay on track, the EU needs to install 30 GW of new wind farms annually, but it only managed 13 GW in 2024 – 11.4 GW onshore and 1.4 GW offshore. This is what’s holding the EU back from achieving its wind growth goals.
Three big problems holding Europe’s wind power back
Europe’s wind power growth is stalling for three key reasons:
Permitting delays. Many governments haven’t implemented the EU’s new permitting rules, making it harder for projects to move forward.
Grid connection bottlenecks. Over 500 GW(!) of potential wind capacity is stuck in grid connection queues.
Slow electrification. Europe’s economy isn’t electrifying fast enough to drive demand for more renewable energy.
Brussels-based trade association WindEurope CEO Giles Dickson summed it up: “The EU must urgently tackle all three problems. More wind means cheaper power, which means increased competitiveness.”
Permitting: Germany sets the standard
Permitting remains a massive roadblock, despite new EU rules aimed at streamlining the process. In fact, the situation worsened in 2024 in many countries. The bright spot? Germany. By embracing the EU’s permitting rules — with measures like binding deadlines and treating wind energy as a public interest priority — Germany approved a record 15 GW of new onshore wind in 2024. That’s seven times more than five years ago.
If other governments follow Germany’s lead, Europe could unlock the full potential of wind energy and bolster energy security.
Grid connections: a growing crisis
Access to the electricity grid is now the biggest obstacle to deploying wind energy. And it’s not just about long queues — Europe’s grid infrastructure isn’t expanding fast enough to keep up with demand. A glaring example is Germany’s 900-megawatt (MW) Borkum Riffgrund 3 offshore wind farm. The turbines are ready to go, but the grid connection won’t be in place until 2026.
This issue isn’t isolated. Governments need to accelerate grid expansion if they’re serious about meeting renewable energy targets.
Electrification: falling behind
Wind energy’s growth is also tied to how quickly Europe electrifies its economy. Right now, electricity accounts for just 23% of the EU’s total energy consumption. That needs to jump to 61% by 2050 to align with climate goals. However, electrification efforts in key sectors like transportation, heating, and industry are moving too slowly.
European Commission president Ursula von der Leyen has tasked Energy Commissioner Dan Jørgensen with crafting an Electrification Action Plan. That can’t come soon enough.
More wind farms awarded, but challenges persist
On a positive note, governments across Europe awarded a record 37 GW of new wind capacity (29 GW in the EU) in 2024. But without faster permitting, better grid connections, and increased electrification, these awards won’t translate into the clean energy-producing wind farms Europe desperately needs.
Investments and corporate interest
Investments in wind energy totaled €31 billion in 2024, financing 19 GW of new capacity. While onshore wind investments remained strong at €24 billion, offshore wind funding saw a dip. Final investment decisions for offshore projects remain challenging due to slow permitting and grid delays.
Corporate consumers continue to show strong interest in wind energy. Half of all electricity contracted under Power Purchase Agreements (PPAs) in 2024 was wind. Dedicated wind PPAs were 4 GW out of a total of 12 GW of renewable PPAs.
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In the Electrek Podcast, we discuss the most popular news in the world of sustainable transport and energy. In this week’s episode, we discuss the official unveiling of the new Tesla Model Y, Mazda 6e, Aptera solar car production-intent, and more.
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The Chinese EV leader is launching a new flagship electric sedan. BYD’s new Han L EV leaked in China on Friday, revealing a potential Tesla Model S Plaid challenger.
What we know about the BYD Han L EV so far
We knew it was coming soon after BYD teased the Han L on social media a few days ago. Now, we are learning more about what to expect.
BYD’s new electric sedan appeared in China’s latest Ministry of Industry and Information Tech (MIIT) filing, a catalog of new vehicles that will soon be sold.
The filing revealed four versions, including two EV and two PHEV models. The Han L EV will be available in single- and dual-motor configurations. With a peak power of 580 kW (777 hp), the single-motor model packs more power than expected.
BYD’s dual-motor Han L gains an additional 230 kW (308 hp) front-mounted motor. As CnEVPost pointed out, the vehicle’s back has a “2.7S” badge, which suggests a 0 to 100 km/h (0 to 62 mph) sprint time of just 2.7 seconds.
To put that into perspective, the Tesla Model S Plaid can accelerate from 0 to 100 km in 2.1 seconds. In China, the Model S Plaid starts at RBM 814,900, or over $110,000. Speaking of Tesla, the EV leader just unveiled its highly anticipated Model Y “Juniper” refresh in China on Thursday. It starts at RMB 263,500 ($36,000).
BYD already sells the Han EV in China, starting at around RMB 200,000. However, the single front motor, with a peak power of 180 kW, is much less potent than the “L” model. The Han EV can accelerate from 0 to 100 km/h in 7.9 seconds.
At 5,050 mm long, 1,960 mm wide, and 1,505 mm tall with a wheelbase of 2,970 mm, BYD’s new Han L is roughly the size of the Model Y (4,970 mm long, 1,964 mm wide, 1,445 mm tall, wheelbase of 2,960 mm).
Other than that it will use a lithium iron phosphate (LFP) pack from BYD’s FinDreams unit, no other battery specs were revealed. Check back soon for the full rundown.