Money
Will the world be able to cope without oil from Russia?
As Russia increases its aggression with neighboring Ukraine, many nations are now blocking imports of Russian oil and gas – so what does this mean for you?
The United States, United Kingdom, and EU have announced that they will restrict Russian oil imports as a sanction of the Kremlin’s war in Ukraine.
But as those imports are stopped, the price of fuel is rising, with many consumers already feeling the pinch as their weekly fill up at the bowser becomes more expensive.
Recent moves by major countries came after Russia warned it could cut off gas supplies to European countries if an oil ban were to go ahead. So what sanctions have been imposed thus far, and how do they impact you?
Current sanctions on Russian oil and gas?
The White House has announced a complete ban on Russian oil, gas, and coal imports – that ban coming after Ukraine’s President Zelensky requested for sanctions by the West to be even harsher.
Britain will begin to phase out Russian oil by the end of the year, and the EU is reducing its imports by two-thirds.
The UK government says this allows enough time for them to find alternative supplies.
The BBC quoted Deputy Russian Prime Minister Alexander Novak when he stated that rejecting Russian oil would lead to “catastrophic consequences for the global market”.
What sanctions mean for rising fuel prices
Oil and gas prices have already risen sharply and could rise even more.
But while the price will rise, the world should be able to cope without Russian supply, due to the mass production in the United States, Middle East and China.
The US is one of the biggest oil producers in the world, with 16.5 million barrels of oil able to be produced in a single day according to data collected by Bloomberg.
Data shows that Russia is the third biggest producer of oil in the world, behind the US and Saudi Arabia.
Of about five million barrels of crude oil it exports each day, more than half of that goes to Europe.
America is less reliant, with about 3% of the country’s imported oil coming from Russia in 2020 alone.
The consequences if Russian gas stopped flowing into Western Europe?
Should Russian gas stop flowing into Western Europe, the consumer will be the one to mostly feel the impact. The price to heat up your house – which is already high – would increase even more.
That’s because Russian gas accounts for about 40% of the EU’s natural gas imports.
Should this be dried up, Italy and Germany would be especially vulnerable.
So does Europe have a backup plan?
The EU could turn to other gas exporters to obtain supply – such as Qatar – or Algeria and Nigeria.
Russia only provides about 5% of the UK’s gas supplies, and the US doesn’t import any Russian gas.
However, prices in the UK and US are still up significantly due to the knock-on effect of supply shortages.
So unless you were to transition to clean energy such as driving an electric vehicle like a Tesla, or using solar panels for your home, expect to pay more during the time of this war.