The United States has decided to ban oil and gas imports from Russia. The United Kingdom, meanwhile, has said it will stop buying Russian oil, and the European Union has decided to cut imports. Russia has warned European countries to cut off gas supplies if the oil trade is banned.
The United States has said it will impose a complete ban on oil, gas, and coal imports from Russia after Ukraine demanded tougher sanctions. Britain has also decided not to use Russian oil until the end of this year. And the European Union is cutting Russian gas imports by two-thirds. The UK government has said it will have enough time to find alternative sources of supply during this period. Russia’s Deputy Prime Minister Alexander Novak has said that the decision to ban Russian oil would have a devastating effect on world markets.
Global oil and gas prices are rising sharply. If Russia imposes an export ban, prices will rise sharply. This will further increase the prices of essential commodities worldwide.
How much oil does Russia export?
Russia is the world’s third-largest oil producer. Russia is followed by the United States and Saudi Arabia. Russia produces 500,000 barrels of crude oil a day. More than half of that oil goes to Europe. In addition, the UK imports 85 percent of its oil from Russia. However, the United States is less dependent on Russia. In 2020, the United States imported only 35 percent of its oil from Russia.
Is there an alternative source of oil supply?
Energy policy research analyst Ben McWilliams says it would be easier to find another exporter for oil than gas. He says this is because there are not many pipelines for gas.
Some pipelines are coming from Russia. However, much other shipping comes from other regions. The United States has been urging Saudi Arabia to increase oil production for some time. But Saudi Arabia has so far refused to increase production to reduce oil prices. Saudi Arabia is the largest oil producer in OPEC. OPEC is an organization of oil-producing countries that produces about 60 percent of the world’s oil.
Russia is not one of the OPEC countries. Since 2017, it has been working with OPEC to set limits on oil production so that producers’ incomes remain stable. The United States, meanwhile, is considering easing oil sanctions on Venezuela. At one time, Venezuela was one of the major suppliers of oil to the United States. But Venezuela has recently begun exporting most of its oil to China.
What if Russian gas stopped reaching Western Europe?
The price of gas used to heat homes has risen in Europe. But if Russian gas stops reaching Western European countries, its costs could rise further. Russian gas accounts for about 40 percent of all EU natural gas imports. Italy and Germany would be the hardest hit if these supplies were cut off. In that case, Europe could turn to gas exporters such as Qatar, Algeria, and Nigeria. But soon there will be many obstacles to increasing gas production.
The UK imports only 55% of its total gas consumption from Russia. The United States does not import gas from Russia. Despite this, prices are rising in the US and UK due to a lack of supply. The alternative to Russian gas is not so easy. It is difficult to get gas supply from anywhere else because gas comes from Russia to Europe through big pipes. If Russia stopped exporting gas to Europe, Europe could order it from the United States. It can also increase the use of other energy sources. But it takes time and is not easy.