UK Foreign Secretary Liz Truss has floated the idea on Feb. 27 of G7 countries imposing limits on the amount of oil and gas they can import from Russia as part of a widening raft of economic measures and sanctions in response to the invasion of Ukraine.
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Truss said this should be part of discussions amongst G7 nations to reduce dependency on Russian oil and gas supplies.
Her remarks follow the decision by major Western allies to ban a number of Russian banks from the SWIFT international payments and messaging system, which is also used in some energy trading.
Urals grade crude produced in Russia has the biggest share of Europe's market for crude, supplying about a quarter of the region's oil and condensates imports. Concerns over disruption to Russian oil supply and trading have hit prices, with buyers looking for alternative cargoes. Russian Urals crude was assessed at its lowest level ever relative to Dated Brent on Feb. 24 but edged 7.5 cents/b higher Feb. 25 amid a lack of indications during the Platts Market on Close assessment process.
Russia is the largest producer in the OPEC+ alliance alongside Saudi Arabia, accounting for about 10% of total global supply. Urals crude is a staple for refiners in Northwest Europe and the Mediterranean. Key buyers include Germany, Italy, the Netherlands, Poland, Finland, Lithuania, Greece, Romania, Turkey and Bulgaria. Russia is also a major supplier to the US and China.
Meanwhile, wholesale natural gas prices in Europe have surged on concerns of supply disruptions from the conflict in Ukraine.
The TTF March price rose by as much as 35% in early trading, reaching Eur120/MWh, according to ICE data. A total of 41.6 Bcm of Russian gas transited Ukraine to Europe in 2021, accounting for around 10% of European demand.