Russia is showing no signs of stopping its Ukrainian invasion, resulting in increased US sanctions on Russia. Moreover, the United States is also working on new plans to reduce Europe’s dependence on Russian energy sources, especially petroleum.
Biden’s government has announced that the economic sanctions will be doubled against Russia. The USA has announced new alliances and deals that will help Europe overcome its reliance on Russia’s Natural gas.
US ANNOUNCEMENT OF PLANS FOR AN INCREASE IN NATURAL GAS TO MINIMIZE THE DEPENDENCE ON RUSSIAN RESOURCES
The USA has formed a task force aiming to provide Europe with an additional 15 billion cubic meters of natural gas within a year, intending to increase the supplies as time progresses, according to a statement released by the US government.
This past Thursday, The US Treasury announced sanctions on 48 Russian defense companies, denying them access to western technology and crucial finances. Plus, the Treasury also forced restrictions on 328 members of various Russian states, including the head of Sberbank, a financial hub of Russian institutions.
Natural gas prices were already on the rise in the international market, then the Russian invasion of Ukraine happened and raised the prices even further! Some experts believe that the increasing rates of oil and gas may push the use of coal in the United States.
US SANCTIONS ON RUSSIA: IMPACT ON THE GLOBAL SUPPLY CHAIN
The Russian invasion has posed a major threat to the entire global supply chain because Russia is the main resource center of Europe and Ukraine also plays a vital role in providing supplies to eastern and central Europe as well as to parts of Africa and a few areas of Asia as well. On the other hand, Russia provides two-thirds of Europe’s oil which jeopardizes the entire continent, and when a continent that is the hub of all technological and industrial advancement such as Europe faces such a severe crisis, the entire supply chain gets affected globally.
Along with economic sanctions, the trade routes are also closed, meaning any cargo (via air, water, or land) passing through Ukrainian or Russian territory is automatically dismantled. Addressing the current situation, Moody said “The myriad risks to supply chain normalization come just as they were beginning to recover from COVID-19”, the biggest issue is the hindrance in the production of auto and semiconductors.
Jerome Powell recently said that if they knew about all the supply chain blockages and all the chaos that resulted in inflation and created a huge gap in the supply and demand operations. If they had known prior, then there’s no doubt that they would’ve made the move of providing the resources to Europe quite earlier.
Countries in Europe, such as its economic hub Germany were looking to buy even more resources from Russia via a pipeline called “Nord Stream 2.” However, after the invasion, Germany decided not only to withdraw the new projects but also announced to cut ties on the ongoing projects with Russian Federation slowly.
As the US looks to increase its natural gas supplies up to 50 billion cubic meters a year by 2030, many difficulties fall ahead of that challenge. The experts in the US energy sectors were surprised by the move because it’s quite challenging to provide that many supplies in such a short period. So, it’ll be interesting to see how the entire situation plays out.