Trump's Impact on Energy Prices: European Gas and Oil Costs on the Rise?
The European Union (EU) is hastening its plan to eliminate Russian gas imports, aiming to completely halt them by mid-2027. This move, announced by EU Commission President Ursula von der Leyen, is intended to increase economic pressure on Russia and make it harder to finance the conflict in Ukraine.
The accelerated timeline is a shift from the previous target, which was the end of 2027 or 2028. The EU has already imposed import bans on Russian energy carriers such as coal and oil, but gas sanctions have not yet been implemented due to dependencies. However, with at least 15 of the 27 EU countries, which together make up at least 65 percent of the total EU population, giving their approval, the rules are set to come into force.
The current EU schedule aims to start banning short-term contracts as early as 2026, with ongoing discussions to finalize legal proposals by January 1, 2028. The EU's goal of ending imports of Russian gas by the end of 2027 is justified on security grounds and is considered achievable by the gas industry.
Gas supplies from Russia accounted for around 19 percent of all EU imports in 2021, with a total value of 15.6 billion euros. Notably, gas worth 19.1 billion euros came from the USA. However, the remaining gas supplies could run out without compromising supply security, according to an analysis by the Brussels authority.
Timm Kehler, CEO of the industry association for the gas and hydrogen industry, warns that without clear replacement strategies, Europe risks rising prices and market instability. Remaining gas suppliers on the global market could help mitigate this risk.
Before the start of the Russian invasion of Ukraine, a significant portion of the EU's energy supply was secured with cheap oil and gas from Russia. Turkey, however, still imports large amounts of cheap energy from Russia and has not shown any signs of wanting to change this quickly.
Russian gas comes mainly to the EU as liquefied natural gas (LNG) and via the TurkStream pipeline. The EU has enough alternative gas suppliers on the global market to help fill the gap left by the phasing out of Russian gas.
Consumers should ideally not have to worry too much as the measures are intended to be implemented gradually and in coordination with EU countries to minimize possible price impacts. The EU is negotiating the proposal presented by the Brussels authority in June, with the member states and the European Parliament currently involved in these discussions.
Trump's plan to impose new sanctions against Russia is unlikely to deter the EU's plan, as it could still be stopped by the Council of Member States. Trump has also demanded high tariffs on Chinese imports and NATO countries like Turkey to join the measures against Russia, but these decisions are beyond the scope of the EU's current plan to phase out Russian gas imports.
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