The US ban on Russian oil import has set alarm bells ringing among EU nations
The United States has caused a global oil slick of economic fortunes by banning oil imports from Russia. The action, though not really severe, has only helped the already rising crude prices spiral further. Significantly, President Joe Biden stopped short of imposing a full sanction on the Russian energy sector. He is aware the European Union members import nearly half their annual consumption from Russia. As a result, the EU, though highly critical of Russia for invading Ukraine, is unwilling to ban Russian oil imports. For, such a decision would spike the rate of inflation, ending in a high fiscal deficit. The US thinks the moral pressure the ban has created would be sufficient to make Russia realise worse could be in store for it if it continues to be on collision course with the international community. Russia is already feeling the pinch. Its daily supplies to the US till recently were worth $1billion. With Russian oil, gas and coal banned, all trade and investments by American companies have also come to a halt. This is enough to drive oil prices up even as Russia finds itself saddled with unsold oil it will have to quickly unload on any willing country at heavy discounts to cut down its losses as much as it can. There is a matter of self-interest in this apparently anti-Russian decision of the US. The Americans stopped importing Russian oil since January as tempers rose over Ukraine. Everything now depends on how long the “war” goes on.
Ukraine’s announcement that Nato’s membership is no longer a priority may lead to de-escalation if that is Russia’s only objective for attacking Ukraine. If President Vladimir Putin insists on demilitarisation of the country and a change of regime as well, the crisis will take a turn for the worse. It could be that in such a situation, even the EU may review its decision to continue Russian oil imports. The US can unleash the second part of the current ban it has not enforced so far. It can decree that nobody will buy Russian oil and the US would stop engaging with any country that does. That is a severe sanction and can cripple Russia’s oil sector. It could also put countries dependent on Russian oil in a quandary. Meanwhile, President Biden is facing a growing internal demand for promoting US-sourced liquefied natural gas as an alternative to Russian gas in Europe. The Americans have been sending a number of tankers to Europe to supplement the latter’s gas supplies. Europe is paying dearly for the consignment. American oil companies feel that if the war lingers on, the Europeans may be inclined to enter into a long-term contract with the US for oil and gas supplies. If oil and gas are geo-political assets, then the US, instead of Russia, could hold the baton in Europe if the war does not end soon.