The United States and the United Kingdom have banned Russian oil, and the European Union has ended its reliance on Russian gas, ratcheting up the economic response to Ukraine’s invasion.
The measure, according to US President Joe Biden, is aimed at “the primary artery of Russia’s economy.”
Energy exports are a major source of income for Russia, but the decision is expected to have an impact on Western customers.
Meanwhile, major corporations have continued to withdraw from Russia, with McDonald’s and Coca-Cola being the most recent to do so.
The economy of Russia is strongly reliant on energy. After Saudi Arabia and the United States, it is the world’s third-largest oil production.
Russia warned of “catastrophic” implications for the world economy before the sanctions were revealed, and suggested it may shut down its main gas pipeline to Germany.
On the ground in Ukraine, residents have been evacuated from two under-attack districts, and the US estimates that up to 4,000 Russian forces have died in the war.
Petrol prices have already reached new highs in the United States and the United Kingdom as a result of the conflict, and analysts worry that they might rise considerably more.
Venezuela, on the other hand, may boost its oil output to assist replace Russian oil.
According to news outlets, Venezuelan oil businesses may possibly increase output by 400,000 barrels per day, according to Reinaldo Quintero, head of the group that represents them.
“With the infrastructure we already have, I believe we can achieve 1.2 million barrels per day. As a result, we will be able to meet part of the demand in the North American market “he stated
President Biden’s declaration came after pressure from all sides of the political spectrum in the United States to do more to combat Russia’s economy.
“We’re prohibiting all Russian oil, gas, and energy imports,” he declared.
“This means Russian oil will no longer be accepted at US ports, and the American people will deliver [President Vladimir] Putin another heavy blow.”
Mr. Biden acknowledged that the action would come at a “cost at home,” but said the decision was made “in close consultation” with friends.
The UK will phase out Russian oil imports by the end of 2022 in a similar manner.
Boris Johnson, the British Prime Minister, acknowledged that the measure would not have an immediate impact on Russia, but said, “What it will do is add to the pressure we’re already seeing on Russia, and don’t forget that the economic impact of the sanctions that the UK has led has been tremendous.”
Russia accounts for roughly 8% of US oil and refined product imports, while Russia accounts for about 6% of UK oil imports.
The EU, on the other hand, is considerably more reliant on Russian energy, therefore its response fell short of a boycott.
To make up for the deficit, the European Commission said it will switch to other suppliers and promote renewable energy quicker, with the goal of making Europe “far before 2030” independent of Russian fossil fuels.
“We’re not standing here to suggest this is going to be simple,” said Frans Timmermans, Vice-President of the European Commission.
“But I’m also persuaded that, even if it’s not simple, even if it’s really difficult, it’s something we must do because it’s now inextricably related to our security.”
Later, Russia said that it would prohibit the export of specific goods and raw materials. The specifics are still being worked out, but Russia is a significant grain and metal exporter.
Even nations with minimal Russian energy imports would be affected, as the measures are expected to increase already high wholesale costs. Inflation is growing in the United States, the European Union, and the United Kingdom, putting further strain on people.
Following Russia’s invasion of Ukraine, the central bank’s assets were blocked, several Russian banks were shut off from global payment networks, and Germany stopped the Nord Stream 2 project, which would have delivered additional gas from Russia to Germany.
Despite the other financial constraints, energy sales have continued to be a source of revenue.