According to the International Energy Agency, many Western countries may experience an energy shock due to supply disruptions of Russian raw materials. The agency also adds that the West is ready for the worst-case scenario, namely the total rejection of Russian oil. Allegedly, the EU is strong enough to withstand the blow.
The EU has already set the goal to lower energy dependence on Russia by gradual reduction of exported volumes of oil and gas. In turn, Russia relies heavily on the revenue from gas and oil deliveries. It makes up the lion’s share of Russia’s state budget. Therefore, if the EU ditches Russian oil and gas, it will undermine Russia’s economy more than sanctions. Currently, being afraid of new sanctions and restrictions, refiners are reluctant to buy Urals. Instead, they come up with different complaints about oil quality, Russian oil companies pointed out. While the EU will be struggling with the energy shortage, China, India, as well as Saudi Arabia and the UAE will take advantage of the situation. If Russia loses one of its main markets, it will have to sell oil at a lower price.
If this scenario comes true, the EU is likely to face a surge in inflation and commodities. It will also affect its GDP. However, there is a silver lining as well. The EU has been considering a complete rejection of oil and petroleum products for a long time. Today's energy crisis may noticeably accelerate this process. The current crisis is associated with problems in the energy markets. However, it also brings new opportunities. Energy security and economic factors may well accelerate the transition from oil, the IEA report emphasizes. The agency has already revised downwards its estimates for the 2022 global oil demand. It now sees crude consumption fall by 1.1 million barrels per day to 99.7 million.
