The effort could hurt Russia but could also help drive up already high oil prices, hurting the global economy and enriching energy companies.
\nHOUSTON
\nThe European Union\u2019s embargo on most Russian oil imports could deliver a fresh jolt to the world economy, propelling a realignment of global energy trading that leaves Russia economically weaker, gives China and India bargaining power and enriches producers like Saudi Arabia.
\nEurope, the United States and much of the rest of the world could suffer because oil prices, which have been marching higher for months, could climb further as Europe buys energy from more distant suppliers. European companies will have to scour the world for the grades of oil that their refineries can process as easily as Russian oil. There could even be sporadic shortages of certain fuels like diesel, which is crucial for trucks and agricultural equipment.
\nIn effect, Europe is trading one unpredictable oil supplier \u2014 Russia \u2014 for unstable exporters in the Middle East.
\nEurope\u2019s hunt for new oil supplies \u2014 and Russia\u2019s quest to find new buyers of its oil \u2014 will leave no part of the world untouched, energy experts said. But figuring out the impact on each country or business is difficult because leaders, energy executives and traders will respond in varying ways.
\nChina and India could be protected from some of the burden of higher oil prices because Russia is offering them discounted oil. In the last couple of months, Russia has become the second-biggest oil supplier to India, leapfrogging other big producers like Saudi Arabia and the United Arab Emirates. India has several large refineries that could earn rich profits by refining Russian oil into diesel and other fuels in high demand around the world.
\nUltimately, Western leaders are aiming to weaken President Vladimir V. Putin\u2019s ability to wreak havoc in Ukraine and elsewhere by denying him billions of dollars in energy sales. They hope their moves will force Russian oil producers to shut down wells because the country does not have many places to store oil while it lines up new buyers. But the effort is perilous and could fail. If oil prices rise substantially, Russia\u2019s overall oil revenue may not fall much.
\nOther oil producers like Saudi Arabia and Western oil companies like Exxon Mobil, BP, Shell and Chevron stand to do well simply because oil prices are higher. The flip side is that global consumers and businesses will have to pay more for every gallon of fuel and goods shipped in trucks and trains.
\n\u201cIt\u2019s a historic, big deal,\u201d said Robert McNally, an energy adviser to President George W. Bush. \u201cThis will reshape not only commercial relationships but political and geopolitical ones as well.\u201d
\nE.U. officials have yet to release all the details of their effort to squelch Russian oil exports but have said those policies will go into effect over months. That is meant to give Europeans time to prepare, but it will also give Russia and its partners time to devise workarounds.
\nWho will adapt better to the new reality is hard to know.
\nAccording to what European officials have said so far, the union will ban Russian tanker imports of crude oil and refined fuels like diesel, representing two-thirds of the continent\u2019s purchases from Russia. The ban will be phased in over six months for crude and eight months for diesel and other refined fuels.
\nIn addition, Germany and Poland have pledged to stop importing oil from Russia by pipeline, which means Europeans could reduce Russian imports by 3.3 million barrels a day by the end of the year.
\nAnd the union has said European companies will no longer be allowed to insure tankers carrying Russian oil anywhere. That ban will also be phased in over several months. Because many of the world\u2019s largest insurers are based in Europe, that move could significantly raise the cost of shipping Russian energy, though insurers in China, India and Russia itself might now pick up some of that business.
\nBefore the invasion of Ukraine, roughly half of Russia\u2019s oil exports went to Europe, representing $10 billion in transactions a month. Sales of Russian oil to E.U. members have declined somewhat in the last few months, and those to the United States and Britain have been eliminated.
\nSome energy analysts said the new European effort could help untangle Europe from Russian energy and limit Mr. Putin\u2019s political leverage over Western countries.
\n\u201cThere are many geopolitical repercussions,\u201d said Meghan L. O\u2019Sullivan, director of the geopolitics of energy project at Harvard\u2019s Kennedy School. \u201cThe ban will draw the United States more deeply into the global energy economy, and it will strengthen energy ties between Russia and China.\u201d
\nAnother hope of Western leaders is that their moves will reduce Russia\u2019s position in the global energy industry. The idea is that despite its efforts to find new buyers in China, India and elsewhere, Russia will export less oil overall. As a result, Russian producers will need to shut wells, which they will not be able to easily restart because of the difficulties of drilling and producing oil in inhospitable Arctic fields.<\/p>\n","protected":false},"excerpt":{"rendered":"
The effort could hurt Russia but could also help drive up already high oil prices, hurting the global economy and enriching energy companies. HOUSTON The European Union\u2019s embargo on most Russian oil imports could deliver a fresh jolt to the world economy, propelling a realignment of global energy trading that leaves Russia economically weaker, gives […]<\/p>\n","protected":false},"author":2,"featured_media":264224,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-264208","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\n