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In response to Russia’s invasion of Ukraine, the UK, EU, and US announced they would restrict Russian oil and gas imports. Germany also cancelled the controversial Nord Stream 2 gas project, a planned natural gas pipeline to deliver Russian gas to Germany.

The US ban on Russian oil and gas is immediate, while the UK intends to phase out oil imports by the end of 2022. The EU plans to reduce Russian gas imports by two-thirds by the end of the year.

Russia is a significant oil producer and supplier to all three markets. Countries are therefore looking for alternative suppliers to supplement Russian production and maintain lower oil prices.

This paper examines the challenges in getting those states most able to supplement Russian production, particularly Saudi Arabia, the United Arab Emirates (UAE) and Venezuela, to increase production. They have mostly either stayed neutral in the conflict or supported Russia.

The Library briefing Sanctions against Russia covers the economic sanctions introduced in 2022. For more on the military and diplomatic aspects of the conflict, visit the Library’s Ukraine crisis page.

How important is Russian supply, and which countries could replace it?

Russia is the second largest producer of oil in the world, behind the US. Russian imports account for 8% of total UK oil demand. Two countries—the UAE and Saudi Arabia—are arguably best able to ramp up spare production capacity quickly. This is where recent UK diplomacy has focused.

Strained relations with US and neutrality towards the Ukraine conflict

Many states in the Middle East have taken a neutral position towards the conflict in Ukraine, or, in the case of close Russian allies such as Iran and Syria, blamed NATO for the conflict.

Saudi Arabia and the UAE have strained relations with the Biden Administration. This reflects the greater focus the Administration has placed on Saudi Arabia’s human rights record and its withdrawal of support for the Saudi-led offensive in Yemen’s civil war.

Other states capable of quickly expanding oil production, namely Venezuela and Iran, are long-standing allies of Russia and both are subject to US economic sanctions. If sanctions are removed from Iran if a new nuclear agreement is reached in 2022, it may be willing to support greater oil exports to improve its faltering economy.

Venezuela, also subject to US sanctions, has seen some thawing of relations in recent weeks, but there were sharp bipartisan criticisms in the US of any attempt to import Venezuelan oil without significant reforms in the country.   

UK visits UAE and Saudi Arabia, March 2022

On 16 March 2022, the Prime Minister, Boris Johnson, visited both Saudi Arabia and the UAE to discuss energy security, including potential measures to diversify the UK’s energy supply. He also raised human rights concerns with Saudi Arabia.

In the Commons, the decision drew criticism for being soon after Saudi Arabia executed 81 people, mostly on charges of terrorism. The UN said around half of those executed were Shia Muslims who had taken part in anti-government protests in 2011-12. While the Prime Minister was in the Kingdom, the country executed a further three people, according to the charity Reprieve.

The visit did not result in pledges from the two countries to increase their production. However, both the UAE and Saudi Arabia committed to improving stability in the global energy markets and to advance green technology and trade with the UK.

Outlook

Oil prices have now fallen from their peaks in early March, partly in reflection of continuing Ukraine-Russian diplomatic talks. At time of writing, these talks are ongoing.


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