The United States and Great Britain refuse Russian oil. Will the country’s economy suffer?
- Olga Shamina
- BBC Russian Service
The US refuses to import Russian oil, gas and coal. By the end of the year, Great Britain will also give up Russian oil. The EU does not intend to introduce such a ban yet, but dependence on Russia is expected. Economists believe that this is a painful, but not the most significant blow to Russian imports and the economy.
US President Joe Biden signed an executive order that completely bans the import of oil, gas and coal into the country. According to the White House, this should deprive President Vladimir Putin of the economic resources he uses to wage “his own useless war.”
The White House statement stipulates that this was adopted after consultations with the allies, that is, first of all, with the countries of Europe.
Following the United States, the United Kingdom followed in the ban on imports. British Prime Minister Boris Johnson has announced that the country will stop importing oil until 2022.
Applies will take up the issue of the oil and gas embargo at the EU-27 leaders’ summit in France on Thursday. So far, an embargo decision looks unlikely because Germany – the most populous country and economic economy – is against communication.
Nevertheless, the EU intends by the end of the year to be two-thirds of its dependence on Russia, although this will be difficult.
How the ban on oil exports to the United States will affect Russia
Russia is largely dependent on oil exports – these are the country’s main exports and imports. It is the export and import of oil and gas in Russia that require foreign currency.
The Russian authorities in recent years believe that Russia is deviating from oil dependence. First of all, it concerns the budget.
For 2022, the budget is made up of oil prices of $44.2 a barrel – all set at a price higher than the National Welfare Fund. Now Brent crude is trading at almost $129 per barrel.
Restricting oil exports will hit the country’s economy hard. However, this applies mainly to oil exports to Europe, and not towards the US or the UK.
Russia mainly supplies fuel oil to the US, President of the Institute of Energy and Finance Marcel Salikhov.
“The main reason for the spread is that the shale oil that is produced in the United States is mostly light oil, and the refineries that are concentrated on the coast of the Gulf of Mexico do not require such light oil. , is an accelerated economist of the reasons for the use of Russian oil in the US.
The main suppliers of oil to the US, he said, were Canada and Venezuela. Gradually, however, supplies from Venezuela fell out of control, and the United States began to actively import this oil from Russia.
“Supplies to the US are no more than 10% of Russian oil exports. It is also important that Russia consumed heavy oil in the US, which is required by the value of Venezuela’s consumption. “Venezuelan choice of oil supply,” said Sergey Suverov, investment strategist at Arikacapital Management Company.
According to Suverov, Russia can redirect oil supplies to China and India instead of the US and the UK.
What happens if it is found
The EU is not yet going to refuse to import Russian energy resources. This is clear: Europe largely depends on the distribution of oil, gas and coal.
It is the European market for various oil products that is for Russia, the particles of Salikhov.
“For Central or Eastern Europe, this is 60%, their own refining there is focused on Russian oil – at the moment it is impossible. There will be problems with the availability of fuel. Naturally, no one can do this,” Salikhov is sure.
The British analytical company Capital Economics describes the possible consequences of the resolution for the Russian economy. They describe the most severe scenario – restrictions on the consumption of gas and coal in all major consumer countries.
For the Russian economy, such a scenario does not mean anything good: a sharp supply of consumer demand and imported goods, and hyperinflation of up to 30% begins, the economist predicts. People are starting to lose their jobs. The dollar under such scenarios rises in price up to 200 rubles. The Central Bank will be forced to raise rates to 35-40% against 20% now.
A wave of company defaults is also possible. At the same time, the Russian economy falls by 20%, the forecast says. The company compares the effect with what the Russian economy experienced in the 1990s.
But for the rest of the world, this will also be a blow, although not as catastrophic as for Russia.
Oil may rise to $160 per barrel. Gas prices will also rise sharply. Energy and fuel prices have risen sharply in the EU. Gradually, this is happening, besides, other products will rise in price, for example, production.
If prices soar more, then this may lead to consequences for the financial markets in the world. Getting loans or financing will become more difficult. States, in the slightest cases, have to resort to the help of their citizens.
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