The UK is phasing out Russian oil and the European Union (EU) is sharply reducing gas imports as countries continue to harden their response to Russia’s invasion on Ukraine.
The United States is also advancing plans to make a similar announcement on oil supply later on Tuesday, March 8, 2022.
The European Commission noted that it would reduce demand for Russian gas by two-thirds. The EU gets 40% of its gas from Russia.
The measures put in place are meant to hurt Russia, as its economy depends heavily on energy exports. But such actions are likely to send prices soaring.
Investors fear of a ban, drove Brent crude oil to $139 per barrel, from an initial $131 at one point on Monday, March 7, 2022, being the highest level in the last 14 years.
Russia earlier warned that it may close its main gas pipeline to Germany if the West bans Russian oil.
Business and Energy Secretary, Kwasi Kwarteng, announced on Twitter that the UK is expected to phase out Russian oil imports by the end of 2022.
He averred businesses should “use this year to ensure a smooth transition so that consumers will not be affected”.
US President, Joe Biden, is expected to speak on the stance of the US, but the White House has not confirmed the ban on oil. Rather, it noted that the President would announce further actions against Russia, a decision that has received political support.
On Monday, March 7, 2022, senior Republicans and Democrats in Congress announced a bipartisan agreement to suspend normal trade relations with Russia and Belarus.
“Taking these actions will send a clear message to Putin that his war is unacceptable and the United States stands firmly with our NATO allies. We are committed to using the tools at our disposal to stop Russia’s unconscionable and unjust war.”
Senior Republicans and Democrats in Congress
Record suggests that about 8% of US oil and refined product imports come from Russia, while Russia makes up about 5% of the UK’s oil imports.
EU’s plans to end reliance on Russian gas
The European Commission has outlined a new energy roadmap designed to cut reliance on Russian gas by two thirds within a year.
The plan hopes to end the EU’s reliance on all Russian fossil fuels “well before” 2030.
In the short term, the EU plans to source gas from the US and Africa, while some countries may rely on more coal in the months ahead. The EU also proposed a massive ramping up of renewables, biogas and hydrogen.
While carbon emissions may rise in the short term, the longer-term is considered a speedier transition to sustainable sources.
The Implication of Russia’s Invasion
Russia’s invasion on Ukraine has brought a new focus on Europe’s reliance on the country [Russia] for oil and gas.
According to figures from the research group, Transport & Environment, the EU gets roughly 40% of its gas from Russia; a dependence that amounts close to $118m a day.
But moving with a decision that only a few considered possible, the EU has now laid out a strategy that could cut reliance on fuel source by two thirds within a year.
The REPowerEU plan is expected to make Europe independent of Russian fossil fuels by 2030, but the initial efforts focus solely on gas.
The roadmap essentially proposed alternative supplies of gas in the next few months and also boost energy efficiency, while doubling down on greener sources of power in the medium to longer term.
EU Commission Vice President, Frans Timmermans, stated that“It’s hard, bloody hard.”
“But it’s possible if we’re willing to go further and faster than we’ve done before.”
EU Commission Vice President, Frans Timmermans
The Commission’s new proposals will make it a legal requirement for EU countries to ensure they have a minimum level of gas storage.
The goal is to have gas stocks at 90% capacity by Autumn [September to November in the northern hemisphere and March to May in the southern hemisphere], up from around 30% now.
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