The Organization of the Petroleum Exporting Countries (OPEC) recently agreed to drastically cut oil production by 2 million barrels a day, which could give Russian President Vladimir Putin a victory over European sanctions against his oil.
The decision comes months after many countries in the European Union (EU) announced sanctions against Russian oil and the US government pleaded with Saudi Arabia not to cut oil production. The announcement puts increasing pressure on countries that have issued sanctions against Russian oil and, in turn, Europeans could see prices soar even higher. Rising prices could increase political tension as countries struggle to find a solution and could even roll back their sanctions.
“We’re going to see what Europeans are made of,” said Igor Lukes, a Boston University professor specializing in history and international relations. Newsweek.
Many EU countries have applied sanctions against Russian oil in the hope of cutting Putin’s profits from oil sales and thus reducing war revenues. Lukes said he hoped those countries would not give in to Russia and reverse their sanctions, despite any discomfort that may arise from the price hike.
Lukes predicts that countries closer to Russia will suffer more than others, as they are more likely to depend on Russian oil. This has led to a mixed approach in Europe, with some countries fiercely opposing Russia’s actions and others continuing to support the Kremlin.
“Countries like Hungary are basically in Putin’s pocket, but that doesn’t apply to all of them because, for example, the Baltic countries – despite being very dependent on Russian energy – are explicitly very critical of the country. respect to Putin,” Lukes said.
Hungarian Prime Minister Viktor Orban has opposed Russia’s war on Ukraine and even called for a ceasefire, but he won’t go so far as to apply sanctions. Orban refused to implement the sanctions because Hungary is heavily dependent on Russian oil and gas. According to an ABC News article, Hungary’s leaders said an EU oil boycott would devastate its economy and “destroy its stable energy supply”.
Other experts believe that some European countries could threaten to lift their sanctions in the hope of inducing the EU to take stronger measures to support countries as prices rise. By threatening to roll back their sanctions, countries could encourage the EU to provide aid, for example by offering grants to countries that have imposed sanctions.
Germany imposed national fuel subsidies to reduce consumer charges. Elizabeth Carter, assistant professor of political science at the University of New Hampshire, said Newsweek not all European countries are able to accomplish similar measures. Countries that lack the capacity to do so on their own can use the threat of lifting sanctions to convince the EU to intervene with similar measures.
“It remains to be seen whether some type of joint borrowing scheme will be put in place – as the EU has done to some extent during the COVID crisis – to subsidize some type of price cap and limit the inflation,” Carter said.
The EU has struggled to agree on such measures, but European Commission President Ursula von der Leyen will meet EU leaders this week to discuss gas price caps in hopes of weakening rising energy costs. According to Reuters, most EU members support a cap, but others like Germany, Denmark and the Netherlands fear a cap could threaten supply.
Bill Davies, an associate professor at American University, said Germany was becoming dependent on Russian energy or Hungary’s relationship with Russia had prevented a unified approach to war, and declining production of oil could exacerbate the EU’s divided front.
“With [OPEC Plus] by further reducing the supply, it will aggravate the tensions that are already playing out between EU member states,” Davies said. Newsweek.
As OPEC Plus leader, Russia agreed with Saudi Arabia to cut OPEC production, leading many to believe it was part of Putin’s strategy as he struggles militarily in the war .
“It will hurt European economies and put pressure on European cohesion,” Carter said.
Despite speculation that the EU may struggle to agree on a solution, Davies said Newsweek the issue could lead to closer relations within NATO and positive thinking about the United States, even if Americans could feel the effects of rising gas prices.
“A more positive view might be that the growing dependence on the release of American oil reserves could serve to tighten the NATO community. More optimistic still, it seems, from the latest reports, that the war itself is rapidly turning in Ukraine’s favor and that an end to the crisis may not be as far in the future as once feared,” Davies said.