Ukraine war: How reliant is the world on Russia for oil and gas?

The US, UK and EU have announced that they will restrict Russian oil and gas imports.

The move came after Russia warned it could cut off gas supplies to European countries if an oil ban were to go ahead.

The US has announced a complete ban on Russian oil, gas and coal imports, after Ukraine called for sanctions to be expanded.

The UK is to phase out Russian oil by the end of the year, and the EU is reducing its Russian gas imports by two-thirds.

Oil and gas prices have already risen sharply and could rise yet further if Russia halts exports. But this is not just about fuel, and UK living standards will be hit, with global commodity prices set to soar even higher.

Russia is the third biggest producer of oil in the world, behind the US and Saudi Arabia.

Russian imports account for 8% of total UK oil demand.

Energy policy research analyst Ben McWilliams says it should be easier to find alternative oil suppliers than it is for gas, “as it’s not so many pipelines. There are some coming from Russia but there’s also a lot of shipments from elsewhere”.

The US has been asking Saudi Arabia to increase its oil production, but it has rebuffed previous US requests to boost output in order to reduce oil prices.

Russia is not in Opec but has been working with it since 2017 to place limits on oil production, in order to maintain earnings for producers.

Heating prices – which are already high – would increase even more.

If this dried up, Italy and Germany would be especially vulnerable.

Europe could turn to existing gas exporters such Qatar – or Algeria and Nigeria, but there are practical obstacles to quickly expanding production.

Russia only provides about 5% of the UK’s gas supplies, and the US doesn’t import any Russian gas.

However, prices in the UK and US are still up significantly due to the knock-on effect of supply shortages.

Not very easily.

“It’s harder to substitute gas because we have these big pipes that are taking Russian gas to Europe,” says Mr McWilliams.

The think tank Bruegel predicts that if Russia were to stop gas supplies to Europe, then Europe could possibly import more liquefied natural gas (LNG) from the US.

It could also ramp up the use of other energy sources, but doing so is not quick or easy.

“Renewables take time to roll out so in the short term this is not a solution,” says research analyst Simone Tagliapietra.

“So for next winter – what can make a difference is fuel switching such as opening up coal-fired power plants, as Italy and Germany have plans to do in case of an emergency.”

The EU has proposed a plan to make Europe independent from Russian fossil fuels before 2030 – including measures to diversify gas supplies and replace gas in heating and power generation.

Consumers will face rising energy and fuel bills as a result of this war.

In the UK, household energy bills have been kept in check by an energy price cap.

In the US, petrol costs have reached their highest levels since 2008, with the American Automobile Association saying that pump prices had jumped by 11% over the past week.

“I think if we’re in a world where Russian oil and gas stop flowing to Europe then we’re going to need rationing-style measures,” says Mr McWilliams.

“Part of the conversation now is, can we tell households to turn their thermostats down one degree, which can save a significant chunk of gas.”