The U.S. decided to ban imports of Russian oil, Turkey said it would continue to buy it, the U.K. confirmed it would stop imports, and the European Commission announced the EU would cut Russian gas imports by two-thirds. So, what impact will this have?
US: No pressure on allies over Russian oil embargo
U.S. Energy Secretary Jennifer Granholm said on Tuesday the United States had not pressured its allies to follow the U.S. ban on Russian oil and energy imports.
She added in an interview with CNBC, “We’re not very dependent on Russian oil, we’re not dependent on Russian gas at all. We know our allies around the world may not be in the same situation. So we’re not asking them to do the same. “
On Tuesday, U.S. President Joe Biden ordered an immediate ban on oil and other energy imports from Russia in response to Russia’s military action in Ukraine.
Russia exports 7 to 8 million barrels of crude oil and fuel to the world market every day.
Free up more reserves and find alternatives
In the United States, State Department envoy Amos Holstein said on Tuesday that the United States and other countries would consider releasing more oil from reserves if necessary.
Holstein added, “If we need to do something again with our allies globally, we will.”
The United States, along with other members of the International Energy Agency, agreed to sell a total of 60 million barrels of crude in a bid to stem the rise in oil prices.
U.S. officials have asked Venezuela to export at least some of its oil to the U.S. as a condition of easing sanctions on Caracas, Reuters reported, citing two sources.
U.S. officials have made it clear that their priority is securing U.S. oil supplies, and any easing of U.S. sanctions would be conditional on direct Venezuelan oil exports to the U.S., the sources said.
Turkey’s position on Russian oil embargo
In Turkey, Energy Minister Alpa Arslan Beraktar said Ankara would continue to buy Russian oil and hoped to lift sanctions on Iran in order to provide more supply to meet global demand.
He added that Turkey depends on Russia for 45% of its natural gas needs, 17% of its oil needs and 40% of its gasoline needs, he added in a statement made on the sidelines of the CERAWEEK energy conference.
“The world needs more oil, and it has to come from somewhere, from the United States, from Venezuela, from Iran, from Saudi Arabia, or from anywhere we want,” he said.
He added that Turkey cannot easily obtain alternative Russian oil supplies from elsewhere, adding that Russia is “a reliable old supplier”.
Turkey previously imported about 200,000 barrels a day of Iranian crude before Washington decided in 2018 to withdraw from the 2015 Iran nuclear deal and reimpose sanctions on Tehran.
“We suddenly dropped to zero (supplies from Iran stopped),” Beraktar said. “Now we can’t have any more disruptions, this time with Russia.”
Turkey hopes Washington and Tehran will soon reach a deal to bring Iran back to compliance with the 2015 nuclear deal.
European position
In the UK, UK Business and Energy Secretary Quasi Quartin announced on Tuesday that the UK will stop imports of Russian crude oil and petroleum products by the end of 2022 in response to Russia’s military intervention in Ukraine.
Meanwhile, the European Union has proposed a new plan to reduce its reliance on Russian energy amid a significant rise in energy prices.
In a statement, the Commerce Department said it would not immediately stop imports of Russian oil, but “give the UK sufficient time to adjust supply chains and support industry and consumers” and that the government would work with companies to support them in finding alternatives .
The statement added that the UK’s decision was made in coordination with the US, EU and other international partners.
British Prime Minister Boris Johnson said the ban on Russian oil imports was only the first step.
The European Union will cut Russian gas imports by two-thirds this year and completely get rid of total demand for Russian oil and gas by 2030, the European Commission said in a statement.
The European Commission explained that the EU plans to increase LNG imports from non-Russian suppliers and lay more pipelines to diversify gas supplies and thereby eliminate reliance on Russian gas.
The EU relies on Russia for 40% of its natural gas, while some countries such as Germany have a higher percentage (55%), stressing that it has no choice “currently”. In addition, Russia annually supplies the EU with about 27% of its oil needs.
European demand for gas passing through Ukraine remains high and peaked on Tuesday under long-term contracts (40 billion cubic meters per year, or 109 million cubic meters per day).
The European reference price of Dutch natural gas TTF reached $2,437 per thousand cubic meters.
What is Russia’s position?
Russian Deputy Prime Minister Alexander Novak believes that Russia may cut off gas supplies to Germany via the Nord Stream pipeline.
He said Moscow had every right to decide to ban the pumping of natural gas.
Novak warned that it would take more than a year for Europe to find alternatives to Russian oil and gas, and it would be more expensive.
Nonetheless, Gazprom spokesman Sergei Kupriyanov told reporters that “the company continues to supply Russian gas as normal through Ukrainian territory at the request of European consumers,” adding that today’s The natural gas pumped volume was 109.5 million cubic meters.
Also in Moscow, Russian President Vladimir Putin signed a decree on the implementation of special economic measures in the field of foreign trade to ensure Russian security.
Putin this year ordered a ban on the import and export of certain products and raw materials from Russia, according to a list established by the Council of Ministers.
The decree stipulates that the implemented ban will not affect the products and raw materials that citizens need on a daily basis.
Putin instructed the cabinet within two days to identify countries that would be affected by the ban on importing and exporting certain types of products and raw materials.
Will the price rise to $300 a barrel?
Matt Smith, chief oil analyst at Kepler, said U.S. oil imports from Russia were very small, but the embargo was “another reason for the reduction in supply.”
“The embargo is just another escalation in a series of events that have driven crude and product prices higher,” he added.
The ban on Russian imports could push global oil prices to $200 a barrel, analysts at Oslo-based consultancy Rystad Energy said.
Before the U.S. ban was announced, Goldman Sachs raised its 2022 Brent forecast to $135 a barrel from $98 and its 2023 forecast to $115 a barrel from $105. Goldman Sachs said the global economy could face “the biggest energy supply shock ever” due to Russia’s dominant role.
Russian Deputy Prime Minister Alexander Novak has warned that oil prices could rise to $300 a barrel if Russian oil supplies are banned.
The supply disruption comes as global inventories continue to decline.
How do high oil prices affect importing countries?
Continued high oil prices caused by Russia’s war with Ukraine could shave a full percentage point off growth in crude imports by large developing economies such as China, Indonesia, South Africa and Turkey, World Bank officials said.
The war will further hamper growth in emerging markets that are already on their way to recovering from the Covid-19 pandemic, the bank’s deputy president for equitable growth, finance and institutions, Andermit Gill, added in a blog post. , is having trouble coping with a range of uncertainties, from debt to inflation.
“The war adds to uncertainty and will reverberate around the world, hurting the most vulnerable people in the most vulnerable regions,” Gill said. “It is too soon to tell how much conflict will alter the global economic outlook,” he added. too early.”
Countries in the Middle East, Central Asia, Africa and Europe are heavily dependent on Russia and Ukraine for food, which together account for more than 20 percent of global wheat exports.
Estimates from a forthcoming World Bank Bulletin suggest that a multi-year 10 percent rise in oil prices could reduce growth by 0.1 percentage point in developing economies in commodity-importing countries, Gill said.
Oil prices have doubled in the past six months and are up about 30 percent since Russia went to war with Ukraine.
Oil prices rose about 4% yesterday, Tuesday, after Britain announced it would phase out imports of Russian oil and its products by the end of the year due to the U.S. ban on Russian oil imports.
Brent crude futures settled at $127.98 a barrel, up 3.9%, while U.S. futures settled at $123.70 a barrel, up 3.60%.
“If this continues, oil could take a full percentage point off growth in oil importers like China, Indonesia, South Africa and Turkey,” Gill said.
He added, “Before the war, South Africa was expected to grow at around 2% per annum in 2022 and 2023, Turkey at 2 or 3%, and China and Indonesia at 5%.”