Warnings over living costs as sanctions target Russian oil

Kwasi Kwarteng announced on Tuesday the UK will phase out the import of Russian oil and oil products by the end of the year.

Warnings over living costs as sanctions target Russian oil iStock
Warning: Petrol prices could rise to £1.60 a litre this week.

Experts have warned of the impact new sanctions on Russian oil and gas imports could have on the cost of living in the UK.

Business secretary Kwasi Kwarteng announced on Tuesday the UK will phase out the import of Russian oil and oil products by the end of the year in a move matched by US President Joe Biden.

The moves were praised by Ukrainian President Volodymyr Zelensky who said they sent a “powerful signal”.

But the RAC Foundation has warned petrol prices could rise to £1.60 a litre this week in the UK and £1.65 soon after, according to the BBC.

And Robert Buckley, an energy analyst at Cornwall Insight, told the BBC although UK ban was “largely symbolic” because only 8% of its energy comes from Russia, it would likely combine with other factors and push up prices.

“This is a global market and you’ve got to replace that displaced supply somehow,” Mr Buckley told the broadcaster.

“At the margin, this decision will act to support oil prices which are already extremely high.”

Nathan Piper, an analyst at Investec, told the BBC the EU’s decision to reduce its reliance on Russian gas could impact the UK.

Boris Johnson suggested diesel prices could rise further in Britain after the announcement, with prices at the pumps already having soared following Moscow’s attack on Kyiv.

But the Prime Minister said the UK was “less exposed” than some European nations when it came to restricting Russian oil – the European Union imports more than a quarter of its oil from Russia.

But Conservative MP and former housing, communities and local government secretary Robert Jenrick told BBC Newsnight it could be “the most difficult economic year we’ve seen in my lifetime”.

Speaking to broadcasters in London, Johnson accepted the decision to target Moscow’s oil would not hit the Kremlin’s regime immediately, with Ukraine continuing to face assault, but said it would add to the “extreme” sanctions already levied.

The UK imported goods from Russia worth a total of £10.3bn in 2021, according to the Office for National Statistics.

This was the equivalent of 2% of the total value of all imported goods from around the world.

No UK petrol demand comes from Russia, nor heating or fuel oil but 18% of the total demand for diesel comes from Russia, according to the Department for Business, Energy and Industrial Strategy.

Ministers were considering steps that could lead to a fracking rethink in the UK after committing to phasing out imports of Russian oil by the end of the year.

Amid concerns over soaring energy costs, it was understood two Cuadrilla sites in Lancashire may be handed over to the Royal Geographical Society rather than being concreted over.

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