LONDON — The U.K. is banning the import of Russian oil in protest at the invasion of Ukraine. And it’s keeping gas in the crosshairs too.
British Business Secretary Kwasi Kwarteng announced Tuesday that the U.K. would phase out the import of Russian oil and oil products by the end of 2022.
It’s not going it alone. The move came as U.S. President Joe Biden also moved to ban imports of Russian oil and gas into the U.S., in a decision Biden promised would “deal another powerful blow” to Vladimir Putin’s “war machine.”
But amid European caution about a similar move, it’s an eye-catching play in the international campaign to isolate Russia over its invasion of Ukraine. Experts said the ban had the potential to match other major historical shocks that sent oil prices rocketing, such as the Iranian revolution of 1979.
For now, British ministers are being cautious to prevent consumers from rushing to the pumps to fill up their cars in a panic.
“Businesses should use this year to ensure a smooth transition so that consumers will not be affected,” said Kwarteng as he made the announcement on Twitter.
He said the government will set up a new oil task force to help find alternatives, and added that he is still looking at banning Russian gas imports.
Counting the cost
Gauging the impact of the ban on the British economy is tricky. It’s hard to be exact about the current level of oil imports to Britain, but most accounts suggest Russia is not a significant source.
The government claims 8 percent of U.K. demand is met by Russia. Some researchers suggest 6 percent of oil imports come from Russia, while others argue that, if all the different forms are put together, Russian oil makes up about 13 percent of the U.K.’s mix.
The British calculation is that Russia needs the cash more than the U.K. needs the oil. “A counter-sanction cutting it off immediately does hurt them more than it hurts us because we can get it from other places,” said one British government official. “Do they cut off their nose to spite their face? I’m not sure that’s the immediate move for them.”
Things could get dicey, however, if Russia cuts off its gas supplies in response to the U.K. and U.S. moves on oil, as well as to counter an EU announcement that it plans to phase down its reliance on Russian gas.
Indeed, replacing oil supplies is easier than replacing gas supplies because “oil is more of a global market, so it’s easier to see where extra supplies might come from,” said Jim Watson, a professor of energy policy at University College London.
Watson said although the U.K. gets less gas from Russia than it does oil, shutting the gas taps off “would be major,” adding: “That would be much more challenging.”
Wanted: oil from elsewhere
The first port of call for the U.K. to plug its oil hole will be to ship more in more from Norway and the U.S. — the two nations Britain gets most of its imported oil from — as well as the Middle East. That won’t stop global prices rising, however.
One option to ease the pressure on prices could be to push for the reinstatement of the nuclear deal with Iran. Lifting sanctions on Tehran would see another big pot of fuel unlocked in the Middle East.
But getting Iranian oil into global veins would take time — even assuming sanctions are lifted over the course of months.
“I suspect that the sanctions relief, which could pertain particularly to oil sales, will be sequenced in a way that it doesn’t all come in one go, in order to check and balance the compliance process on both sides,” said Sanam Vakil, deputy head of the Middle East and North Africa program at the Chatham House policy institute.
But she added: “I do think it will give markets a boost and a bounce in a downward direction.”
The other problem with the Iran plan is that Moscow could refuse to sign up to a new nuclear deal if it thinks the risk of Tehran building a nuclear weapon is worth the pain to the West.
Another option gaining traction among Conservative backbenchers is for Britain to pump more oil out of the North Sea or lift a ban on fracking — the controversial process of pummeling the ground to release natural gas, which has won support from net zero-skeptic Conservative MPs.
But neither option is the instant shot in the arm advocates hope for. “It can take up to 30 years to develop a new source,” John Selwyn Gummer, the chair of the independent Committee on Climate Change, which advises the government, told POLITICO. “So the idea that there’s a quick fix by producing more ourselves is just simply not on.”
Fracking is not cost-effective, he added, and requires heavily contested planning permission — often in areas where local opposition will make that all but impossible.
Instead, Gummer argued the fastest and cheapest route would be for Britain to boost its green credentials, which could have the added benefit of seeing the U.K. stick to its climate ambitions.
He said new wind sources, including floating turbines, would offer a cost-effective and quick route to alternatives. The faster the U.K. can harness renewables, he argued, the faster it can start “taking back control” of its energy supply — quoting the famous Brexit campaign phrase from the 2016 EU referendum that Prime Minister Boris Johnson led.
Sebastian Whale and Alex Wickham contributed reporting.
This article has been updated with further details of the British plans.