Closing summary
Time to wrap up, after another dramatic day in which Western countries moved to reduce energy ties with Russia and more multinationals cut links.
The United States and the UK have both announced bans in Russian imports, intensifying the economic pressure on Moscow as the war in Ukraine continues.
US president Joe Biden announced that a ban on US imports of Russian oil, gas and energy would deal another powerful blow to Putin’s war machine.”, declaring:
“Today I’m announcing the United States is targeting the main artery of Russia’s economy.”
Biden acknowledged that European partners were not able to move as fast, and said the US would work with them to cut their dependency on Russian energy.
The UK is acting to, but less swiftly, saying it would end Russian oil imports by the end of the year, and explore ways to end gas imports from Russia too.
Business secretary Kwasi Kwarteng said businesses should use the time to “ensure a smooth transition so that consumers will not be affected”.
The UK imports 8% of its oil from Russia. Kwarteng said he would be establishing a “taskforce for oil” to help companies find alternative suppliers. He pointed out that the UK is a significant producer of oil and alternative suppliers included “reliable partners such as the US, Netherlands and the Gulf”.
Kwarteng added that “while the UK is not dependent on Russian natural gas – 4% of our supply – I am exploring options to end this altogether”.
The US and UK moves pushed oil back towards Sunday night’s 14-year highs, with Brent crude oil surged as much as $10 per barrel, or 8% to hit $133/barrel.
MPs were told Britain could learn from Japan’s response to the Fukushima nuclear plant disaster by reducing energy consumption to deal with soaring global gas prices after the Russian invasion of Ukraine.
Suggesting a coordinated response to record gas prices could help ease the pressure on households, experts told MPs on the Commons business committee that steps to reduce national demand for gas-fired power next winter could be deployed.
The European Union also outlined plans to slash consumption of Russian natural gas by two thirds this year, and aim for a complete break with its single biggest energy supplier well before 2030 over the war in Ukraine.
Frans Timmermans, the European Commission vice-president in charge of the bloc’s energy transition, said the EU needed to become more independent in its energy choices:
Renewables are a cheap, clean, and potentially endless source of energy and instead of funding the fossil fuel industry elsewhere, they create jobs here. Putin’s war in Ukraine demonstrates the urgency of accelerating our clean energy transition.
Major companies have continued to cut ties with Russia, as its isolation deepens as the humanitarian crisis in Ukraine darkens.
Shell annnounced it will withdraw from the Russian oil and gas market, starting with halting purchase of Russian crude oil on the spot market.
Shell will shut its service stations, aviation fuels and lubricants operations in Russia, and start “a phased withdrawal” from Russian petroleum products, pipeline gas and LNG (liquified natural gas).
Shell also apologised for buying a consignment of Russian crude last week.
Consumer goods giant Unilever is to stop importing or exporting goods with Russia, and called for an end to Russia’s “brutal and senseless” war.
Fast food giant McDonalds has bowed to pressure, and will temporaily shut its 850 Russian restaurants.
There was also fresh turmoil in the metals market say the nickel price briefly doubled to $100,000 per tonne.
In an unprecented move, the London Metal Exchange suspending nickel trading, and then cancelled this morning’s trades. A ‘short squeeze’ has hurt traders who had bet against nickel, with Bloomberg reporting that Chinese nickel entrepeneur Xiang Guangda faces losses running into billions of dollars.
The surge in nickel will push up the cost of batteries for electric cars. And with other metal prices also at record levels, the cost of vehicles could rise.
Fertiliser prices are also soaring, which could drive up food prices or force farmers to cut production, with animal feed and CO2 also much pricier.
Economists have slashed their forecasts for the UK economy. The CEBR economic coonsultancy warning that the recovery will grind to a halt next year, as sanctions imposed on Russia lift commodity prices and push up inflation.
ING forecast that inflation will peak near 8% next month, when energy bills soar.
Resolution predicted the biggest squeeze on incomes in decades.
The bakery chain Greggs has warned prices are likely to increase due to a surge in the costs of ingredients, energy and fuel after Russia’s invasion of Ukraine.
Greggs, best known for its sausage rolls and pasties, predicted profits would fail to increase in the year ahead as it tried to offset cost inflation of up to 7%, up from 5% at the start of 2022, with the uncertain outlook.
European stock markets had a calmer day, with the UK’s FTSE 100 index closing slightly higher (up 5 points at 6964 points). Oil producers rallied, as did travel companies and banks.
Germany’s DAX ended the day flat, a day after sinking into a bear market (down 20% from its January peak).
And away from Russia, Lego reported a jump in profits due to strong sales during pandemic lockdowns.
Our main Ukraine liveblog is here:
Goodnight. GW
Updated
Larry Elliott: How the US Russian oil ban risks splitting the west’s response
Joe Biden’s ban on Russian oil imports has three risks, our economics editor Larry Elliott writes:
First, it could push up energy prices even higher, leading to more expensive gasoline at the pumps.
Second, it risks fracturing the western coalition against Putin, given European governments aren’t able to cut their own imports from Russia.
Thirdly, Putin could gets in his retaliation first by cutting off supplies, with Europe announcing plans to reduce its dependency on Russian oil and gas too.
Larry writes:
The EU has announced steps to reduce its dependency on Russian oil and gas, and the crisis could well have the effect of speeding up the transition from fossil fuels to clean energy, but in the short term the loss of such a big chunk of its energy supply would result in weaker growth and higher inflation.
While high energy prices eventually prove self-correcting because they tend to lead to recessions, the damage they can cause is considerable. UK living standards are on course for their biggest one-year fall since modern records began in the mid-1950s, with the war in Ukraine putting at risk the post-pandemic recovery. All of which makes it important that sanctions work quickly. The longer the economic war, the higher the cost.
