The Energy Curtain: All Eyes on Fossil Fuel Prices This Summer

Camilla Jensen, Guillermo Larbalestier, Peter Holmes

Publikation: AndetUdgivelser på nettet - Net-publikationForskning


• Economic sanctions against Russia targeted at oil and gas could lead to the formation of an Energy Curtain, creating a renewed East-West divide not experienced since the dissolution of the Soviet Union in 1991.
• The aim of the sanctions is two-fold: First, to help stop the Russian invasion of Ukraine by reducing Russian revenues from oil and thus to inflict economic pain on Russia. Secondly, to decouple the West from a high dependency on Russian oil and gas.
• Russia is the largest supplier of petroleum oils and natural gas to the European Union, but the trade- related policies implemented and announced thus far concerning these commodities may have failed to reduce dependency on Russia or cripple its foreign revenues to finance the invasion.
• Due to Russia’s alliance with OPEC (as a member of OPEC+), Europe may not have sufficient influence to force the price of Russian oil downwards, neither by imposing tariffs nor through other sanctions that have been mooted. Tariffs risk driving up the world market price, at least in the short-run, by increasing OPEC’s pricing power.
• Import bans are the most effective means to achieve decoupling and the longer-term objective of creating an Energy Curtain. In the short term, there could be a similar side-effect as with tariffs that puts upward pressure on the world market price. A ban is also equally likely to be circumvented because Russia could redirect the rejected supplies to other countries. Yet, since a ban would force Russia to sell to third countries at a discount, it could be the best policy option for now.
• The latest proposal formulated among G7 leaders is a price cap in a buyers’ club, but this is likely to suffer from similar problems and would be difficult to administer.
• Oil prices have responded to the different trade policy actions by Western governments, whereas gas prices have been more under the influence of Russia’s policies, few Western policy actions concern Russian gas.
Publikationsdato4 aug. 2022
UdgiverUK Trade Policy Observatory, University of Sussex
Antal sider11
StatusUdgivet - 4 aug. 2022


  • Economic sanctions
  • Trade policy
  • Punitive tariffs
  • Russian oil & gas
  • Energy curtain
  • Geoeconomics

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