The costs of banning Russian oil

Europe is the most vulnerable to a Russian oil ban. [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( Banning Russian oil imports would seem to be an obvious weapon to strike at the heart of Vladimir Putin’s war machine. But the costs to the outside world would be enormous. Key reading: - [U.S. Weighs Acting Without Allies on Ban of Russian Oil Imports]( - [Oil Traders Are Betting Prices May Pass $200 a Barrel This Month]( - [War Exposes Europe’s Failure to Heed Warnings Over Russian Gas]( - [What a Ban on Russian Oil May Mean for an Already Chaotic Market]( - [Why Sapping Russia of Oil Money Is Key to Making Sanctions Work]( - Follow the latest with our [rolling coverage]( In the U.S, where Russian oil made up about 3% of all crude shipments last year, it appears straightforward: Many U.S. lawmakers are demanding the move, encouraged by Ukrainian President Volodymyr Zelenskiy’s request during a call with them on Saturday. The difficulty for Joe Biden’s administration is that such a decision would stoke energy prices and inflation — particularly dangerous ahead of the November midterm elections that could cost the president’s party control of Congress. Yet it’s Europe that is most vulnerable. The European Union still relies on fossil fuels even as it bids to lead the global fight against climate change. It failed to heed warnings provided by previous supply cuts by Russia, and while clean energy is being built out, renewables are not yet plentiful enough to make the switch. Any move to block oil would risk provoking Putin to cut off natural gas supplies. With Russia’s export company Gazprom providing at least 40% of Europe’s supply — more than 60% for Germany, Europe’s economic powerhouse, in 2020 — that could wreak havoc. EU Commission chief Ursula von der Leyen says the bloc is taking steps to ensure gas supplies and that even if Putin were to halt flows “then we are independent for this winter,” and “that wasn’t the case six weeks ago.” Even so, the impact of the news that Washington is even considering a unilateral Russian oil ban has sent prices soaring on global markets to their highest since 2008. If it goes ahead, Russia won’t be the only country squeezed — much of the rest of the world will feel the pain. — [Karl Maier]( A woman is assisted by Ukrainian servicemen across a destroyed bridge in the city of Irpin, northwest of Kyiv, during heavy shelling and bombing on Saturday. Photographer: Aros Messinis/AFP/Getty Images Follow all our coverage in our daily Balance of Power [newsletter](. You can sign up for this special briefing [here](. Global Headlines Onslaught continues | Russia’s invasion heads toward the two-week mark with potentially catastrophic [implications]( for Ukrainian civilians and greater challenges for the country’s so far remarkably successful defense, [Marc Champion]( reports. Ukraine today rejected a Russian proposal to evacuate people from war zones to Belarus and Russia, asking instead for humanitarian corridors to other areas in the country. - Nearly all economies are seeing a drop in international trade tied to [disruptions]( triggered by the war, the Kiel Institute for the World Economy says. China’s stand | Beijing declared ties with Moscow to be “[rock solid](” despite Putin’s actions in Ukraine, while repeating the accusation that the U.S. is trying to build a Pacific version of NATO. Foreign Minister Wang Yi pledged at his annual news briefing today that China will continue with “its comprehensive strategic partnership and coordination,” providing Putin with a much-needed boost in the wake of international condemnation. - President Xi Jinping expressed [zero tolerance]( for anything that could undermine ethnic harmony, a sign he’s sticking to assimilation policies that have spurred allegations of human rights abuses. European currencies are [plunging]( to new lows as the war in Ukraine escalates. Poland’s zloty and Hungary’s forint dropped to records against the euro. Every eastern European currency has slid against the dollar in the past week, led by losses in the ruble. Best of Bloomberg Opinion - [Aiding Ukrainian Resistance Would Be Risky for U.S.: Hal Brands]( - [Putin’s Goodbye Will Be a Long One: Clara Ferreira Marques]( - [Seizing Superyachts Will Not Help Ukraine Win: Matthew Yglesias]( Deal close | The revival of the 2015 Iran nuclear deal could be announced as soon as this week, with U.S. Secretary of State Antony Blinken saying the deal is [close](, though with some “very challenging remaining issues.” An agreement could [release]( tens of millions of barrels of Iranian crude oil onto global markets within months. Explainers you can use - [What We Know About Hong Kong’s Likely Covid Lockdown]( - [Bankers Are Abandoning Hong Kong as Beijing, Covid Remake City]( - [What’s Next for China Evergrande, Crushed by Debt]( Covid flight | Hong Kong locals and expatriates are [flying]( out in large numbers while the government plans to tackle its Covid-19 outbreak with mass testing and a potential lockdown. A total of 5,082 people left yesterday, the most since the city was hit with its most severe and far-reaching wave of Covid. Singapore is a popular choice as a bolt-hole. Bloomberg TV and Radio air Balance of Power with [David Westin]( weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online [here]( or check out prior episodes and guest clips [here](. News to Note - U.S. efforts to catch up with China and Russia in developing hypersonic weapons may be [set back]( after Lockheed Martin’s air-launched missile suffered three consecutive test failures that left it on a tight schedule. - Libya’s [oil production]( has fallen below 1 million barrels a day, as the OPEC member plunges deeper into political crisis just as prices surge. - Burkina Faso’s military leader, who took power after a coup earlier this year, has [appointed]( a government almost entirely of technocrats that excluded members of political parties. - Voters in a key South Korean swing district are [waffling]( in their choice of a president. The central city of Cheongju has backed the winning candidate in the last seven elections. - Australia will spend at least $7.4 billion building a new base to house a future fleet of [nuclear submarines](. And finally ... Five years ago, Prime Minister Narendra Modi’s party won big in India’s most-populous state thanks in part to so-called low-status voters who endorsed his economic vision. Now they’re showing signs of looking [elsewhere](. As [Bibhudatta Pradhan]( reports, soaring prices, joblessness and health complications from a wave of delta-fueled Covid-19 infections last year are high on the minds of voters in Uttar Pradesh, the most crucial of five states that will reveal election results this week. Modi during a campaign rally in Varanasi on March 4. Photographer: Sanjay Kanojia/AFP/Getty Images Like Balance of Power? [Get unlimited access to Bloomberg.com](, where you'll find trusted, data-based journalism in 120 countries around the world and expert analysis from exclusive daily newsletters. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. 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