Russia is one of the world’s biggest oil producers and a vast majority of its oil exports are purchased by Europe and China. Data from 2020 showed that with 3.6 million barrels per day, China imported the most, followed by Germany with 0.84 million per day
A motorcyclist gets fuel at a gas station in Beirut, Lebanon. The rise of oil prices worldwide as a result of Russia’s invasion of Ukraine has led to long lines of cars at gas stations during Lebanon’s worst economic crisis in its modern history. AP
The Russia-Ukraine conflict has entered Day 20 and is showing no signs of ending any time soon. The Western nations, led by the United States, has been continuously pressuring Vladimir Putin to put an end to the ‘special military operation’ that he began on 24 February.
Several countries across the world have imposed an unprecedented number of sanctions against Russian firms and oligarchs; reputed companies are suspending their operations in Russia, all in the hope that a weakened economy would make Vladimir Putin rethink his decision and finally, put an end to the offensive against Ukraine.
On 9 March, in an attempt to ramp up pressure on Russia, President Joe Biden announced a ban on US imports of Russian oil. In an address from the White House, Joe Biden said, “We’re banning all imports of Russian oil and gas and energy. That means Russian oil will no longer be acceptable at US ports and the American people will deal another powerful blow to (President Vladimir) Putin.”
How significant was this move taken by the US? Would a US ban really affect Russia? What exactly is Russia’s oil production capabilities and who imports the most oil from Moscow?
We answer these questions and much more.
Who produces the most oil?
As per data provided by Bloomberg in 2020, Russia is the world’s third biggest producer of oil, behind United States and Saudi Arabia.
The data sourced from Bloomberg shows that Russia in 2020 exported about five million barrels of crude oil each day of which almost half went to various countries in Europe. This clearly shows the dependence of Europe on Russia when it comes to oil and why they as a whole are yet to announce a full ban on Russian oil. As of date, the UK has announced that it would phase out Russian oil by the end of the year, and the EU is reducing its Russian gas imports by two-thirds.
Who imports Russia’s crude oil?
Russia’s crude oil flows across the world — from Siberia to the cities of Beijing, Berlin and beyond. As per International Energy Agency’s 2020 data, China and Europe make up Russia’s biggest oil buyers. The data shows that Russia consumes about 3.45 million barrels a day while exporting more than seven million barrels of crude oil and other petroleum products a day, shipped primarily through pipelines but also by tankers.
The above chart clearly shows that China is the biggest purchaser of crude oil from Russia, followed by Germany and The Netherlands.
According to a UN Comtrade report of 2020, China’s value of crude oil imported from Russia is $23.77 billion.
Similarly, Germany’s crude oil imports from Russia were valued at $6.28 billion and it was $9.42 billion for The Netherlands.
The report also revealed that China accounted for 32.8 per cent of Russia’s oil exports, while Germany and The Netherlands accounted for 8.7 per cent and 13 per cent respectively.
The UN Comtrade report said that the value of crude oil that the US imported from Russia in 2020 was $950 million and it only made up 1.3 per cent of Russia’s exports.
Dependence on Russian oil varies widely among European Union countries. Germany and Poland imported the largest quantities for domestic use. Among EU countries, Slovakia, Finland and Lithuania rely most on Russian oil imports.
Not just oil, but gas too
Russia isn’t just a key player when it comes to oil production. It also is a major player when it comes to gas production.
The conflict has clearly shown Europe’s energy reliance on Russia, particularly for natural gas. Of all the Western nations, no country is as dependent on Russia for gas as is Germany. According to a report in The Guardian, 55 per cent of the natural gas in Germany comes from Russia.
Earlier, Germany had warned that an immediate boycott of Russian gas and oil supplies could hurt its own population more than Vladimir Putin, bringing mass unemployment and poverty.
What are the alternatives?
Many nations are looking at finding different countries to fulfil the loss of oil from Russia.
But, this is no easy task with the global demand for oil expected to rise 3.2 million barrels a day in 2022 to a total of 100.6 million a day, as per the IEA’s recent report.
Another worry is the geopolitical instabilities of countries such as Libya, Iraq or Nigeria, which could help in bridging the gap of oil from Russia.
The United States when announcing its ban on Russian oil imports had already turned its attention to Venezuela.
As reported previously in an article ‘The changing face of geopolitics: How Russian oil ban has forced the US to turn to Venezuela‘, Biden’s decision came after a delegation from Washington met Venezuelan president Nicolas Maduro in the capital Caracas. This was the first high-level talk between the two countries in years.
Hours after Biden’s crucial announcement on Russian oil, Venezuela said it could increase its oil production to 400,000 barrels a day.
Another alternative is looking to Iran, who is among the top producers of oil in the world. However, this option is riddled with several impediments, including the nuclear deal, which has been stalled for years.
Oil prices across the world
On Monday, crude oil prices dipped below $110 a barrel as Russia and Ukraine met for a fouth time amid the conflict.
Crude prices have soared since the invasion, but talks of supply boost from other countries, including Iran, have stabilised the prices.
With inputs from agencies
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