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If the European Union decides to impose a full oil and gas embargo on Russia, the shock waves of the move would end up costing the UK economy more than $90 billion, the country’s chancellor said.
The warning comes in response to a call by Prime Minister Boris Johnson on the UK’s allies to follow its example and ban all imports of Russian fossil fuels. The UK said earlier this month that it would phase out imports of Russian oil, which account for about 8 percent of its total imports, by the end of this year.
In search of alternative supplies, Johnson this week visited Saudi Arabia and the United Arab Emirates, but, according to a Wall Street Journal report, the visit was not exactly productive, with Saudi officials saying the UK’s Prime Minister left Riyadh empty-handed.
The U.S. has also banned Russian oil and gas and is currently looking for alternatives, even reaching out to Venezuela and promising sanction relief in exchange for oil deliveries.
The EU, meanwhile, has taken a more guarded stance on oil and gas sanctions because of its excessive reliance on Russian fossil fuels. Russia supplies about 40 percent of the EU’s imported gas and a quarter of its crude oil.
If however, Brussels for some reason decides to harden its stance despite the huge recession risk, the UK economy, which is not even in the EU anymore, will suffer a hit of between $92 and $98.7 billion (70-75 billion pounds), Chancellor Rishi Sunak told other ministers. The amount is equal to 3 percent of the UK’s GDP.
According to the European Central Bank, a drop of 10 percent in gas supplies to Europe would translate into a 0.7-percent GDP drop. So instead of banning Russian oil and gas imports, the EU will now try to reduce its imports of Russian gas specifically by two-thirds within a year.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.