The tactical reasoning behind the US ban on Russian oil and gas imports, and a UK plan to phase out Russian oil imports by the end of the year is clear: to deprive Moscow of the foreign currency necessary to fight its war in Ukraine and close one of the few remaining gaps in the economic blockade that has been imposed on Russia. On their own, the moves are unlikely to be effective. The two countries account for only a small portion of Russia’s oil exports. The commodity is fungible and traded on global markets. Any broader embargo also needs to be part of a well-thought-out strategy.
Oil and gas revenues are vital to Moscow, making up 36 per cent of the country’s budget in 2021, although that partly reflected already-surging prices. The importance of these funds has only increased: last week, after sanctions were imposed on the central bank’s foreign exchange reserves, Russia changed its rules to allow oil and gas revenues to be used more freely to fund day-to-day expenditure.
The US imports very little oil from Russia, however; much more goes to the EU and China. With even higher global prices for the black fuel — partly thanks to the anticipation that Russian supply will, one way or another, be affected by the war — the country will still earn a substantial amount from exporting to other trade partners.