The Russian Oil Ban – How Will It Impact the Average Consumer?
by Sumona Community and Social Services 24 May 2022
The world has entered a period of significant instability, owing to Russia’s incitement of war through the attempted invasion of its neighbor state, Ukraine.
The global response has been near-universally to condemn the attempted invasion, with major Western allies applying international sanctions to Russia in order to weaken its standing.
The Russian oil ban is now the latest news in the consumer market of the oil industry. This brings upside changes in the oil market.
One recent major intervention comes in the form of a ban on the purchasing of oil from Russia – a move designed to isolate Russia and cripple its income streams from international trade.
The ban, however, will have knock-on effects on domestic consumers in the UK and Europe. How does the oil ban work, and what will its effects be on the UK consumer?
Russian Oil Ban Impact On The Average Consumer
The Russian oil ban impacts the average consumer situation.
This is a global market. So there is no doubt that these norms will influence global consumers. Let’s see what the impacts are on the regular consumers of the Russian oil Bans.
Here are a few case scenarios that are influenced by the Russian oil ban norms.
1. The Oil Ban
The Russian oil ban on imports is part of a joint agreement between the UK and the US, as part of a plan to limit Russia’s spending power and impact its domestic economy.
The reasoning is twofold: increased economic troubles domestically could lead to civil unrest in Russia, applying domestic pressure to halt war efforts in Ukraine; also, cutting off a major income stream for the country could directly affect the Kremlin’s war coffers, resulting in decreased military power and a quicker end to the attempted invasion of Ukraine.
2. Price Volatility
The Russian oil ban has had a significant impact on fuel prices already, with more volatility indicated later in the year.
Petrol prices had already reached a record £1.55 per liter owing to private action from oil companies to boycott Russian oil, but prices have since risen yet further.
The instability caused by the ban on Russian oil has not been limited solely to fuel prices, though; hikes in the wholesale price of oil have also had a cumulative effect on pre-existing domestic crises in the UK.
3. The Wider Impact Of The Ban
A winter fuel crisis saw household bills more than double over the festive period, while the deleterious effects of the Brexit trade agreement saw supply shortages of common household goods. The result has been an ever-growing rate of inflation, which threatens to breach 10% later in 2022.
The increased economy due to the difficulties imposed by the Russian oil ban and other factors are leading households to re-evaluate their expenditure and search for new, sustainable ways to save money.
With fuel costs becoming prohibitively expensive for many families, some are hastening the switch to more fuel-efficient vehicles by leasing a new car online; others are switching from fossil-fuelled vehicles altogether for full-electric alternatives.
Related: The Pearson Economy: Things To Know
What Is The Impact On The Global Oil Market?
This ban on Russian oil is having a huge impact on the global commodity market.
This is not all. Every country that is using Russian oil is going to suffer. Especially for consumers to pay more for this is a severe issue. Russia will lose a large number of global consumers.
These impacts are long-lasting. Both the Russian oil companies and the global consumers are going to face the challenges. So no one can deny the impact on the global oil market of banning Russian oil. Even if the consumers are already prepared to shift to another brand, this is also true. If the ban is removed, then consumers will not change their taste.
The Russian oil ban on importing Russian oil was a tough decision to make economically speaking, as the inflationary effects of such a ban were well-known; however, public opinion of the move is largely positive, owing to sympathy for Ukraine and awareness of the humanitarian crisis occurring within its borders. The increased oil prices are also incentivizing quicker development of sustainable fuel technology to limit future reliance on Russia and reduce environmental impacts in one.