Potential Increase in Gas and Oil Prices in Europe Due to Trump Influence - Trump's Impact on Energy Prices in Europe: Potential Increase in Gas and Oil Costs?
Europe is taking significant steps to phase out its reliance on Russian oil and gas, aiming to increase economic pressure on Moscow and curtail funding for the war against Ukraine.
The latest initiative comes from European Commission President Ursula von der Leyen, who announced plans to expedite the EU's exit from all Russian oil and gas imports. This accelerated exit, while lacking specific details, aims to speed up the original plan which envisioned stopping Russian gas imports by 2028 and oil imports by the end of 2027.
The current plan for stopping Russian energy supplies involves a gradual phase-out of gas imports, with a complete end by 2028. However, the EU has already imposed import bans on Russian energy carriers such as coal and oil, albeit with some exemptions for gas. It is conceivable that the Commission may scrap these exemptions.
The EU's goal of ending imports of Russian gas by the end of 2027 is considered achievable by the gas industry. Natural and processed gas worth 15.6 billion euros was imported from Russia last year, according to figures from the EU statistics office Eurostat. There are enough alternative suppliers on the global gas market to replace Russian gas, according to a Brussels authority.
Despite the significant decrease, 13 million tons of oil still came from Russia to the European market in 2021. A complete import ban on oil is planned by the end of 2027, according to the EU's current plan.
However, the phase-out of Russian gas may not come without risks. 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.
The von der Leyen initiative could still be stopped by the Council of Member States. Meanwhile, US President Donald Trump has linked new American sanctions against Russia to the EU's full abandonment of energy from Russia. Turkey, which still imports large amounts of cheap energy from Russia, hasn't shown any signs of wanting to change that quickly.
Ukraine criticizes that Europeans are still paying billions for Russian energy supplies, thereby also filling Russia's war chest. Europe was largely secured with cheap oil and gas from Russia until the beginning of the Russian attack on Ukraine.
It is worth noting that Russia's war economy is financed largely through revenues from the sale of oil and gas, according to von der Leyen. Gas from Russia mainly comes to the EU as liquefied natural gas (LNG) and via the TurkStream pipeline.
Consumers should ideally not have to worry too much about price impacts due to the phase-out of Russian gas, as measures will be implemented gradually and in coordination with EU countries. However, the potential for market instability and rising prices remains a concern.
After a call with Donald Trump, von der Leyen announced an initiative to accelerate the EU's exit from all Russian oil and gas imports. It is highly doubtful that this plan is enough to make Trump impose new US sanctions on Russia, as Trump has also demanded high tariffs on Chinese imports and NATO countries like Turkey to join the measures against Russia.
In conclusion, the EU is taking steps to phase out its reliance on Russian energy, aiming to increase economic pressure on Moscow and cut funding for the war in Ukraine. However, the process may not be without challenges, including potential market instability and rising prices.
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