The European Union, the United States of America and their allies imposed a series of sanctions aimed at harming the Russian economy and financial system, and prompted President Vladimir Putin to reconsider his country’s war on Ukraine, but it is noteworthy that these sanctions have not yet affected the Russian oil and gas sectors, despite their great importance to Moscow’s budget.
Sanctions on the energy sector
The governments of the countries of the world continued their rejection of imposing sanctions on the Russian energy sector, to protect the global economy from being subjected to a greater shock as they tightened financial control over Russia, according to the German news agency.
And while the price of oil last week crossed the $100 a barrel barrier for the first time since 2014, and the price of European natural gas jumped by 62%, these gains were partially halted and took a rebound trend as the United States and the European Union avoided imposing sanctions on Russia’s huge energy supplies as part of the sanctions .
Although some Russian banks will be excluded from the SWIFT financial system, which connects thousands of banking institutions around the world, Bloomberg News Agency quoted an official as saying that the White House is considering granting exemptions for transactions involving the energy sector.
But Archyde.com quoted the White House as saying that imposing energy sanctions on Russia is on the table.
In Europe, the French government said on Saturday that European energy ministers will hold an emergency meeting in Brussels on Monday, following high oil and gas prices in the wake of Russia’s war on Ukraine.
This comes at a time when the International Energy Agency pledged to ensure global energy security, and its director, Fatih Birol, said that the agency’s member states agreed to continue work and solidarity to ensure global energy security.
Who loses from sanctions on the Russian energy sector?
magazine saystime(Time) that any measure targeting Russian oil and gas exports, which last year accounted for 36% of the national budget, has been absent from public debate so far.
So far – the magazine adds – the call for restrictions or embargoes on Russian oil and gas – echoed by Ukrainian President Volodymyr Zelensky and called by other Ukrainian officials – seems far from the realm of possibility.
The magazine states that any Western ban on the Russian energy sector will already be painful for Putin, but he will not feel its full effects until years later, while Europe and the rest of the world will have much to lose in the short term.
The magazine said that the European Union relies, on average, on Russia to provide 35% of its natural gas needs.
The magazine pointed out that tensions over Ukraine have already exacerbated the fuel price crisis in Europe, which has already started since last year due to the shortage caused by the world’s exit from the Corona pandemic, noting that the cost of megawatt-hours of natural gas is currently estimated at regarding 10 times what It was like a year ago.
And the magazine warned – in a report – that imposing any sanctions on the Russian energy sector will lead to a rise in prices globally, while fears of the possibility of this actually caused a noticeable impact, so natural gas prices rose Thursday by 51% in Europe, and crude oil – which Russia is the world’s second largest exporter – a 7-year high of $105 a barrel.
Time stresses that despite this, experts do not rule out a more aggressive strategy once morest the Russian energy sector by the European Union and the United States if the war on Ukraine continues.
In the medium term at least – the magazine says – Russia’s war on Ukraine constitutes a turning point in Russia’s oil and gas exports, as European Union officials announced that they will unveil on the second of next March a strategy to reduce dependence on Russian energy as quickly as possible, Including the goal of reducing fossil fuel use by 40% by 2030.
The United States and Eastern Europe had repeatedly warned that the Kremlin would not hesitate to use its gas supplies to launch a geopolitical war in response to Western sanctions.
While the Nord Stream 2 natural gas pipeline project has been suspended, European energy companies remain closely linked to the Russian market, with companies such as BP, Royal Dutch Shell and Total Energy is involved in billions of dollars in oil exploration and production projects, according to the magazine.Foreign Policy“American.
The magazine warned that the continued dependence on Russian gas warns – according to experts – that Europe will bear the brunt of the supply crisis.
Russia’s isolation from Swift threatens to increase oil prices
Meanwhile, Archyde.com quoted analysts as saying that the decision by Western allies on Saturday to isolate some Russian banks from the Swift payments system is likely to raise oil prices well above $100 a barrel as the risks of trading Russian oil rise.
Traders and analysts said Russian exports of all commodities, from oil and minerals to grain, would be severely affected by the new Western sanctions.
And at least 10 oil and commodity traders, who spoke to Archyde.com, said that the flow of Russian goods to the West would be severely disrupted or stopped for days, if not weeks, until the exemptions became clear.
The measures, which include limits on Russia’s central bank’s international reserves, are aimed at preventing President Vladimir Putin from using the central bank’s $630 billion in foreign currency reserves in his war once morest Ukraine and to preserve the value of the falling ruble.
“The risk of involuntary disruptions to oil supplies has increased in the wake of the most recent announcements,” said Giovanni Stonovo, an analyst at UBS, referring to Russia’s isolation from the Swift system.
“Given low inventories and dwindling spare capacity, it is likely that oil prices will react in a sensitive manner and become higher,” he added.
For his part, Qatari oil expert Muhammad Yaqoub Al-Sayed told Al-Jazeera Net that any targeting of the Russian oil and gas sector will cause a major global crisis, and cause confusion on the level of supplies, especially since Russia is one of the largest producers in the world, and a founding member of the “OPEC Plus” group. .
He adds that the fear of a decline in Russian supplies makes the United States of America, the European Union and their allies reluctance to impose sanctions on the Russian energy sector, noting that sanctions of this kind will push prices up and make things worse.
The Qatari oil expert expected that oil prices would rise once more, following the isolation of Russian banks from the SWIFT global system.
He said that regarding 40% of Russian transactions are implemented through this system, and this will expose a large spectrum of its foreign transactions to stop or shake.
As for the Kuwaiti oil expert, Dr. Ahmed Bader Al-Kuh, he pointed out that the main reason why Europe and the West in general are slow to impose sanctions on the Russian oil and gas sector lies in the fact that Europe is in dire need of Russian gas in particular.
He stressed in a statement to Al Jazeera Net that Europe still needs Russian supplies, and that replacing Russian gas with another from other countries remains difficult to obtain.
“Russian gas cannot be replaced quickly, and no alternative can be found, and this is a reason that affected Europe’s reaction to the Russian energy sector,” he said.
But he pointed out that the British oil company “BP” announced – today, Sunday – its withdrawal from the capital of the Russian giant “Rosneft”, which has a stake of 19.75%, describing this step as important and influential in the Russian economy.
Regarding his expectations for oil prices, the Kuwaiti oil expert added that any sanctions taken by the West will have an impact on oil prices. Not in terms of the actual impact on production and consumption, but in terms of investors and market expectations regarding the possibility of a large supply disruption to the oil market.
Source : Al Jazeera + time + Foreign Policy + agencies