In official circles at the highest level, from the G7 to the European Council, a tense debate is taking place on what to do about spiralling gas and oil prices, which have either broken or have come dangerously close to breaking record territory. In Europe, a special meeting of the European Council on energy was originally scheduled for the fall, but is now being brought forward, while the European Commission is working on an emergency plan to prepare for a complete cut-off of Russian gas. Energy prices dominate the agenda of our leaders.
Yet it is a confused and often confusing debate that is worth unpacking.
The debate at the G7 largely revolves around oil, also because gas is not a problem for the US or Canada. The US and the UK have already blocked all imports of Russian oil. This was relatively easy for them to do as the US does not import significant amounts, and the UK received its oil from other sources anyway.
Until recently, the EU imported up to 40 per cent of its oil from Russia. The European Council has in principle decided that by February 2023 all imports of oil and refined products from Russia will stop, with the exception of smaller amounts arriving through the Druhzba South pipeline serving Hungary, the Czech Republic and Slovakia, as well as Croatia for vacuum gas and Bulgaria for shipped oil. An even more consequential measure is the limitation on EU (and UK) maritime insurance companies to provide cover for cargos containing Russian crude. This measure could potentially limit Russia’s capacity to export, not just to Europe, but worldwide, driving oil prices even higher.
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