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Russia sanctions: Can the world cope without its oil and gas? Russia sanctions: Can the world cope without its oil and gas?
(about 1 month later)
The European Union has agreed to ban all Russian oil imports which come in by sea. Several European countries say they have received significantly less Russian gas than expected in recent weeks.
It says new sanctions against President Putin's "war machine" could cut the amount of oil it buys from Russia by 90%. Gas flows have been halted completely from major a pipeline into Europe for annual maintenance, with Germany expressing fears the shutdown could become permanent.
The US and UK have also announced bans on Russian fossil fuels. Western leaders have imposed a series of sanctions on Russian oil and gas following the invasion of Ukraine. There are warnings Russia may stop supplying gas to Europe this winter in retaliation.
How severe are the EU sanctions? What sanctions are in place?
Russia has been supplying about a quarter of the oil EU countries import. That is about 2.2 million barrels per day of crude oil and 1.2 million barrels of oil products. The European Union has agreed to ban all Russian oil imports which come in by sea by the end of this year.
According to the Carnegie Endowment, a US think tank, this has been earning Russia more than $1bn (£800m) a day. It will allow oil to continue to be imported by pipeline, with EU leaders saying this is a "temporary measure" because countries like Hungary and Slovakia depend on it.
The EU plans to ban Russian oil imports arriving by sea by the end of this year. This would cut EU nations' oil imports from Russia by two-thirds. The EU has also committed to reducing gas imports from Russia by two-thirds within a year, but it has been hard to get agreement on any further measures, such as an outright import ban.
The EU will continue to allow 800,000 bpd of oil imports brought in by pipeline, as a "temporary measure". In addition to these EU sanctions, the US has declared a complete ban on Russian oil and gas imports. The UK is to phase out Russian oil imports by the end of the year.
That's because countries like Hungary and Slovakia depend on it. President Putin has demanded that "unfriendly" nations in Europe pay for gas in Russian roubles, which would help prop up the value of the currency.
However, Germany and Poland - which also import Russian oil by pipeline - say they will stop doing so by the end of this year. Poland, Bulgaria and Finland refused to do so and Russia cut off their supplies.
European Commission President Ursula von der Leyen says that after this, Russia will only be exporting "10 or 11%" of the oil it had previously been selling to EU states. Several other European energy companies are paying for gas via Russian bank accounts, which convert euro payments into roubles. They insist those payments are in line with EU sanctions.
In addition to the EU's measures, the US has declared a complete ban on Russian oil, gas and coal imports. The UK is to phase out Russian oil imports by the end of the year.
What sanctions are being imposed on Russia?
What impact could oil sanctions have on Russia?
The EU has called its sanctions a "landmark decision to cripple Putin's war machine".
Helped by soaring energy prices, Russia received an estimated €400bn ($430bn, £341bn) over the past year from oil and gas exports to Europe.
The EU hopes it will lose a big chunk of this revenue.
However, its sanctions will take several months to come into full effect, and even then Russia will be able to sell its oil elsewhere around the world.
"Countries in Asia might buy up to one million barrels per day more crude oil from Russia than they are taking now," says David Fyfe, chief economist with energy data firm Argus Media.
"As a result of all the sanctions announced so far, Russia may lose between one third and a half of its total oil revenues, but not all of them."
Will Europe go short of oil?
A lot of European nations could have their oil supplies squeezed by the ban on Russian imports.
Lithuania and Finland got about 80% of their oil from Russia in November last year.
However, EU countries can always buy oil from other producers.
Added to this, more oil is being put onto world markets.
The IEA - a club of oil importing countries - have released 120m barrels-worth of crude from their stocks. US President Joe Biden ordered a major release of oil from America's reserves.
"Nations like Saudi Arabia might start putting more oil onto the world market later in the year, and there could be more supplies from the US," says Kate Dourian, fellow at the Arab Gulf States Institute in Washington, DC.
How much does Europe rely on Russian gas?How much does Europe rely on Russian gas?
Russia supplies the EU with 40% of the natural gas it imports. Russia supplied the EU with 40% of its natural gas last year.
Its government has been taking advantage of the hold over European nations this gives it. Germany, Europe's largest economy, was the largest importer of Russia gas in 2020, followed by Italy.
President Putin demanded that "unfriendly" nations in Europe pay for gas in roubles, to help him prop up the value of the currency. The UK is less reliant on Russian gas, importing just 4% of its needs from there last year, and the US doesn't import any gas from Russia.
Poland, Bulgaria and Finland refused to do so and Russia cut off their supplies. The EU has said it considers Russia's action to be a form of blackmail. There's doubt over whether the EU will be able to find other gas supplies than Russia's.
Will the EU sanction Russian gas? "It would have to turn to producers such the US and Qatar, which would ship liquefied natural gas (LNG) in tankers," says energy advisor Kate Dourian.
In March, the EU committed to reducing gas imports from Russia by two-thirds within a year.
However, it has been hard to get agreement on any further measures, such as an outright import ban.
Germany, Europe's largest economy, relies on Russia for almost half of its gas supply.
There's doubt over whether EU nations will be able to find other gas supplies than Russia's.
"It would have to turn to producers such the US and Qatar, which would ship liquefied natural gas (LNG) in tankers," says Kate Dourian.
"But there aren't enough LNG terminals in Europe. This is will be a problem for Germany, particularly. It simply doesn't have the equipment to unload it.""But there aren't enough LNG terminals in Europe. This is will be a problem for Germany, particularly. It simply doesn't have the equipment to unload it."
The Nord Stream 2 pipeline and the Ukraine crisisThe Nord Stream 2 pipeline and the Ukraine crisis
IEA: Green energy needed to avoid turbulent pricesIEA: Green energy needed to avoid turbulent prices
Will Europe run short of oil?
Many European nations could have their oil supplies squeezed by the ban on Russian imports.
Lithuania and Finland got about 80% of their oil from Russia in November last year, the latest data available.
However, EU countries can always buy oil from other producers.
The IEA - a club of oil importing countries - have released 120m barrels-worth of crude from their stocks, and US President Joe Biden ordered a major release of oil from America's reserves.
"Nations like Saudi Arabia might start putting more oil onto the world market later in the year, and there could be more supplies from the US," says Kate Dourian.
Will sanctions work?
Helped by soaring energy prices, Russia received an estimated €400bn ($430bn, £341bn) over the past year from oil and gas exports to Europe.
The EU says their latest sanctions could cut the amount of oil it buys from Russia by 90%. However, its sanctions will take several months to come into full effect, and even then Russia will be able to sell its oil elsewhere around the world.
What are the sanctions on Russia?
"Countries in Asia might buy up to one million barrels per day more crude oil from Russia than they are taking now," says David Fyfe, chief economist with energy data firm Argus Media.
"As a result of all the sanctions announced so far, Russia may lose between one third and a half of its total oil revenues, but not all of them."
What will happen to my heating and fuel bills?What will happen to my heating and fuel bills?
Consumers face rising energy and fuel bills as sanctions on Russian energy kick in. Consumers are facing rising energy and fuel bills as sanctions on Russian energy kick in.
Heating prices - already high - are likely to increase even more if Russian gas exports to Europe are restricted. Heating prices are likely to increase even further if Russian gas exports to Europe are restricted.
In the UK, household energy bills have been kept in check by an energy price cap.In the UK, household energy bills have been kept in check by an energy price cap.
But bills rose £700 to about £2,000 in April when the cap was increased. They are expected to reach about £3,000 when the cap is increased again this autumn.But bills rose £700 to about £2,000 in April when the cap was increased. They are expected to reach about £3,000 when the cap is increased again this autumn.
UK petrol and diesel prices have also soared, and the government has announced a cut in fuel duty as motorists struggle with record prices.UK petrol and diesel prices have also soared, and the government has announced a cut in fuel duty as motorists struggle with record prices.
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