President Joe Biden has announced a US ban on buying oil from Russia as leaders in the West try to tighten sanctions against Vladimir Putin’s rogue state.
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As the fighting in Ukraine intensifies two weeks into the Russian invasion, NATO countries refuse to step into the onslaught for fear of provoking Moscow’s wrath against them.
Instead, the US, UK, European Union and other allies have cut off the Russian economy from the West and intend to carry on a war of attrition to make the country bankrupt.
Oil and gas supplies are at the heart of sanctions.
Russia relies on selling energy to the world with profits siphoned to pay for the military, but the economy is over-reliant on this sector.
How Much Oil Does Russia Export?
Russia is the world’s third-largest oil producer, behind the US and Saudi Arabia.
However, that ranking can change as other countries turn their oil and gas production on and off.
Around half of the 10.7 million barrels of oil Russia pumps out of the ground every day goes to Europe. However, Russian oil accounts for only 8 per cent of the UK’s supply and 3 per cent of the US needs.
Top 10 oil producers
The world’s leading oil producers ranked by millions of barrels produced each day.
The Hunt For Alternative Oil Supplies
It’s easier to shift oil in bulk than gas. Most oil is transported worldwide in tankers, while gas is more volatile, harder to handle and is supplied to Europe by a pipeline from Russia.
Biden and European leaders are urging Saudi Arabia and the other Gulf States to cover the Russian supply. Still, the Saudis seem to be holding back to wait for the escalating price to rise even higher.
Saudi Arabia and many other oil-producing countries belong to OPEC – the Organisation of the Petroleum Exporting Countries – but the USA and Russia are not members. OPEC provides around 60 per cent of the world’s oil supplies.
Although not a member, Russia has worked with OPEC for several years to peg oil prices. The tool they use is switching supplies on and off to keep the price as high as possible.
What About Russian Gas Supplies?
Several European countries rely on Russian gas to drive power stations and industry.
The European Union imports around 40 per cent of the bloc’s total gas needs from Russia, with much of the supply going to Germany and Italy. The UK imports little gas from Russia – around 5 per cent.
NATO countries Turkey, the Netherlands, Hungary and Poland are also at risk if Russia shuts off supplies.
Politicians are exploring an increase in production with other suppliers, like Nigeria, Qatar and Algeria.
Who imports Russian gas?
The chart shows countries relying on Russian gas supplies ranked by billions of cubic metres imported each year.
How Are Energy Prices Affected?
Businesses and consumers are already feeling the impact of sanctions against Russia.
Since January, energy costs in Europe have jumped 142 per cent. Most of the rise has come in recent weeks as the threat of invasion intensified and became a reality for Ukraine.
In the US, which is less reliant on oil and gas imports, the increase in prices is 37 per cent.
Can The World Replace Russian Oil And Gas?
The world can replace Russian oil and gas as other countries step up and produce more fuel for the West.
The EU proposes to wean businesses and consumers off oil and gas by 2030 by diversifying suppliers and finding new ways to fuel power generation.
Britain and the US have similar plans.
Will Sanctions Hurt Russia?
How sanctions will pan out as an effective tool to curb Russian aggression is unknown.
In the short term, sanctions are unlikely to hurt the Russian economy enough to force a change of tactics and a withdrawal from Ukraine.
For example, banning Russian oil and gas by the USA does little financial damage to either nation.
The US imports little Russian oil and no gas. Russia can sell the surplus oil elsewhere – customers could include China and India.
Before sanctions impact Russia, the world order has to change. First, countries must agree on a course of action and stick with it. Embargo loopholes need tightening, and more countries need to agree to blacklist Russia to affect the economy.
While companies and countries value money above human rights, sanctions will look good for leaders to brag about what they are doing to aid Ukraine but achieve little.
Can The World Survive Without Russian Oil And Gas FAQ
What is a sanction?
A sanction is a punishment imposed by one or more countries against another country that fails to comply with international law.
Sanctions are designed to exact a financial penalty as an alternative to a military confrontation.
What sanctions is Russia facing?
Russia risks becoming a pariah state as more countries break ties with Putin’s government.
Besides oil and gas embargos, an ever-increasing number of Western brands are pulling out of the country. These businesses include oil company Shell, McDonald’s, Apple, Microsoft and Ikea.
What are the Russians saying about sanctions?
The Kremlin claims they were ready for sanctions and will do little to hurt the Russian economy.
Putin slammed the US for declaring an economic war but still quaintly calls his invasion of Ukraine a ‘special military operation’.
What are the effects of sanctions so far?
The Russian stock exchange closed two weeks ago, and the central bank doubled interest rates to nearly 20 per cent to counter inflation.
Banks cannot access foreign currency accounts, and the ruble is next to worthless. As more Western brands withdraw stock and shutter their stores, prices are rising in supermarkets. Western businesses are also switching off their Russian websites.
Which countries are imposing sanctions?
The list is long, including the US, every member of the European Union, Switzerland, the UK, Canada, Japan and South Korea.
Notable exceptions are China, India, Brazil, Israel, Mexico and South Africa.
Venezuela, Cuba, North Korea, and Syria are lining up on Russia’s side.
Venezuela is an interesting case. The country is a significant oil producer under sanctions by the US but could provide the States with an alternative to the oil now under embargo imported from Russia. Maybe the Latin American outcast can find a way back due to the Russo-Ukraine war.
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