America has now banned Russian oil. This led to a jump in crude. Brent crude price reached $ 129 per barrel on Wednesday. On the other hand, Britain has said that it will gradually reduce energy imports from Russia. It plans to bring imports to zero by the end of 2022. Most of the European countries import energy from Russia.
European countries import about 40 percent of their gas from Russia. They import about 25 per cent of their oil from Russia. European countries plan to cut gas imports from Russia by two-thirds. Earlier, Russia had threatened to cut off the supply of natural gas to Europe from the Nord Stream 1 pipeline if sanctions were imposed on it. On the other hand, the US imports less than 10 percent of its energy from Russia. Experts say that therefore the ban on Russian oil will not have much effect on America. Let’s try to know what will be the effect of the ban on Russia’s oil.
What will be the effect on Russia?
Gasoline (petrol) prices have increased in America. Its average price has reached $ 4 per gallon for the first time since 2008. Right now, there is little hope of a complete ban on Russian oil from the US and Europe. German Chancellor Olaf Scholz has said he has no plans to completely ban Russian oil. Germany imports the most energy from Russia in Europe.
On the other hand, US Parliament Speaker Nancy Pelowski has said that even if the proposal to ban Russia’s oil is passed, the Biden government and Congress are not interested in reducing oil prices for the American people. However, he has supported the ban on Russian oil. He referred to Biden’s move, in which he asked America’s allies to release 60 million barrels from the Strategic Reserve. Of this, $ 30 million was released in America.
How much oil does Russia export?
Before Russia’s attack on Ukraine, Russia’s share of every 10 barrels of crude in the world was 1 barrel. However, the global oil market is witnessing the biggest turmoil since the 1970s after the US and Western countries imposed sanctions on Russia. Energy prices will continue to rise as Ukraine and Russia continue to fight. The reason for this is that there is currently no other option for Russia’s global exports. Russia exports about 5 million barrels of oil daily.
Oil prices were already climbing. Economic activities around the world are returning to normal once the effect of Corona subsides. Due to this, oil producers have to face difficulties in meeting the increasing demand. In the last two years, the world’s largest oil companies have reduced production.
What will be the effect on oil prices?
A month ago, the price of crude was around $ 90 per barrel. Now the price has increased to $ 129 per barrel. The reason for this is that many countries of the world are shying away from buying oil from Russia. Experts say that if European countries also ban Russian oil or some countries keep away from buying Russian oil, then its price can go up to $ 160 or even $ 200 per barrel.
What will be the effect on inflation?
Commodity prices have risen sharply since the sanctions on Russia. The London Metal Exchange has stopped trading when the price of nickel crosses above $ 1 lakh per tonne. Nickel is used to make stainless steel and electric vehicle batteries. Its price in January was around $20,000 a tonne. On the other hand, gold has crossed $2000 an ounce. There has also been a jump in many other commodities.
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