THE ECONOMIC IMPLICATIONS OF THE OIL EMBARGO
European nations have already raised inflation concerns over the EU’s proposition to part with Russian oil imports. Although, the President of the EU has promised that the proposed embargo will be implemented in a manner that will not occasion economic hardship on any states, economic experts still fear that it is not enough guarantee.
The reality is that if the embargo pushes through, the world will be left with less oil supply which will consequently lead to inflation in oil prices. The German Industry Trade Group BDI said the following words; “Given the oil embargo, energy prices will probably continue to rise.”
Germany’s Economic Minister also said; “It’s inconceivable that sanctions won’t have consequences for our own economy and for prices in our countries,” he said. “We as Europeans are prepared to bear [the economic strain] in order to help Ukraine. But there’s no way this won’t come at a cost to us.”
It should be noted that Russia is the world’s third-largest oil producer after the US and Saudi Arabia, exporting over five million barrels of crude oil per day. Whichever way we look at it, the oil embargo will affect the vast majority of European citizens as inflation in oil prices cannot be forestalled timeously.
Furthermore, the oil embargo will deeply affect the Russian economy as a huge part of its revenue is dependent on oil export to Europe.
TACKLING THE ENERGY CRISIS
As part of the measures to part with Russian oil, the European Commission has reported a 210 billion euros ($220bn) plan to end its reliance on Russian petroleum derivatives in a range of five years, and accelerate its progress to environmentally friendly energy. The EU anticipates that they should require
210 billion euros in additional ventures by 2027 and 300 billion euros ($314bn) by 2030, all in a bid to meet the 2030 environmentally friendly energy target. The ventures incorporate 86 billion euros ($90bn) for sustainable power and 27 billion ($28bn) for hydrogen foundation, 29 billion euros ($30bn) for power lattices, and 56 billion euros ($59bn) for energy investment funds and intensity siphons. This will aid the EU to achieve its new target of 45 per cent renewable energy sources by 2030, with its former target of 40 per cent. It will also help in replacing the energy consumption by 13 per cent by 2030, in contrast with its current 9 per cent proposal.
Notwithstanding the wonderful plans of the EU in ditching Russian oil, the question still remains that member states need to find temporary solutions to cushion the effect of the embargo if it finally pushes through. As it stands, the only way forward according to analysts, is to look for alternative supplies in order to bridge the gap that the embargo would create.