The US and its allies said they would impose "severe and immediate economic costs on Russia" after Russian forces moved into Ukraine, with measures targeting the country's largest financial institutions and wide-ranging technology export restrictions1. The UK also banned Russia's national airline, Aeroflot, from landing in Britain, and British airlines were in turn banned from Russian airspace on the Friday1.
The European Union is targeting Russia's energy sector through an export ban on materials used by Russia for oil refineries1. Germany's chancellor Olaf Scholz stopped the approval process for Nord Stream 2 on the day Russian forces moved into separatist-controlled regions of Ukraine1. The German government is also looking to accelerate renewable electricity to meet 100% of power demand by 2035, partly in response to the crisis1. The European Commission was reported to be launching its long-planned communication on 2 March1.
Russia is the world's second largest gas producer after the US, responsible for 17% of global output in 2020, and the third largest oil producer after the US and Saudi Arabia, accounting for 12% of output1. Europe receives around 70% of Russia's gas exports and half of its oil exports, and more than a third of Europe's gas supplies come from Russia1. The UK sources less than 5% of its gas from Russian imports, relying largely on North Sea reserves and supply from Norway1.
In early February, three weeks before the invasion, Russia and China signed new oil and gas deals worth an estimated $117.5bn (£86.6bn), including a 30-year gas contract1. China also approved imports of wheat from Russia, with assurances that Russia would "take all measures" to prevent contamination by wheat smut fungus1.
"the US and its allies would be \"imposing severe and immediate economic costs on Russia\""
Why it matters for households
Wholesale gas prices were already at extremely high levels before the invasion, and the attack prompted fresh worries about global energy supplies1. Up to 22 million households could already see a 54% spike in energy bills, from £1,277 to £1,971, on 1 April when the energy price cap is raised1. The price cap is the mechanism that limits what suppliers can charge on default tariffs, and its level is set by the regulator rather than by events in energy markets directly, so the invasion's effect on household bills runs through wholesale prices rather than through the sanctions themselves. For a home's energy independence, the picture differs by country: the UK's direct exposure to Russian gas imports is small, while much of continental Europe depends on Russia for a large share of its gas. The crisis has also put renewed attention on domestic generation and on how quickly countries can shift their electricity systems.
What happens next
The European Commission was reported to be launching its long-planned communication on 2 March1. The German government is aiming to accelerate renewable electricity to meet 100% of power demand by 20351. No further dated steps on the sanctions themselves have been reported.