American President Biden signed an executive order to ban the import of Russian oil, liquefied natural gas, and coal to the United States, which has kicked off an international campaign to remove Russian oil and gas from the international market. But the real question is how it is going to have impact across the world.
Russia is the world’s largest exporter of crude and oil products. It provides about 30 per cent of the European Union’s crude supply and almost 40 per cent of its gasoline. It is the third largest producer of oil and the second largest producer of natural gas globally.
HOW WILL THE ATLANTIC ALLIANCE REACT?
European countries, which are part of the Atlantic alliance, have already expressed their opposition and even rejected Washington’s proposal. Germany that relies on Russia for nearly 40 per cent of its energy needs has totally rejected the US. Poland gets 67% of its oil from Russia, while Ireland gets only 5%.
WILL THE SOUTH WITHSTAND A PRICE HIKE?
The Global South will find it difficult to afford oil prices once it climbs to 150 dollar to 200 dollar per barrel. The price hike could spiral inflation endangering collapse of demand, triggering the onset of recession if not worse. The adverse social costs of such a situation are not hard to predict.
CAN THE SUPPLY GAP BE FILLED?
The world knows that UAE or Saudi Arabia or the US can fill the supply gap created by the void of Russian intentional oil market.
With oil prices increasing, the price for everything has started to increase in several European countries and economy in major countries will be in shambles.