Energy security and oil sanctions: A transatlantic balancing act?

A discussion on how the United States can support efforts to phase out Russian oil purchases without further deepening the current energy crisis in Europe.

 
On Tuesday, May 31, 2022, the Atlantic Council’s Global Energy Center and Europe Center hosted a discussion on how the United States can support EU efforts to phase out Russian oil purchases without compounding the current energy crisis, a day after the European Union’s historic announcement of a partial ban on Russian oil imports. The panel was joined by Dr. Ellen R. Wald, nonresident senior fellow at the Global Energy Center, Brian O’Toole, nonresident senior fellow at the Atlantic Council GeoEconomics Center, and Edward Fishman, nonresident senior fellow at the Eurasia Center. Ambassador Daniel Fried, Weiser Family distinguished fellow at the Atlantic Council, provided opening remarks, while Ambassador Richard Morningstar, founding chairman of the Global Energy Center, moderated.

Ambassador Fried opened the discussion by outlining the previous day’s proposal from the European Union for a partial embargo of Russian oil in response to the war in Ukraine. Referring to energy sanctions as “the long pole in the tent that encompasses the various points of pressure that the West can exercise against Vladimir Putin and the Russians,” Fried noted the unprecedented nature of the European Union’s newfound desire to address its overdependence on Russian energy but cautioned that more must be done to deprive the Kremlin’s war machine of funding. He called for vigorous US collaboration with Europe to go after Russia’s oil revenues worldwide, and outlined strategies to do so, including price caps and limiting Russia’s ability to finance its energy sector using the US dollar.

Turning to the panel discussion, Fishman detailed his proposal for a price cap that could curtail Russia’s oil revenues by limiting what large-scale importers of Russian oil like China, India, and Turkey would pay for it. This price ceiling, set and enforced by the United States, would dent Russia’s trading income without cutting global supply in a market already stretched thin. Fishman argued that price controls would allow importers in Asia to capitalize on an opportunity to pay less for Russian oil, and adherence to the caps could be further incentivized by the threat of secondary sanctions from the United States and European Union. While conceding the difficulties in ensuring total adherence to a price cap, Fishman nevertheless noted that the mechanism “would go much further than the current policy in terms of achieving the goal, which is to curb revenues going into Russia.”

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Πηγή: atlanticcouncil.org