Commentary
Not only have sanctions on Russian oil been an unmitigated disaster for Europe, they have also significantly affected U.S. consumers and businesses, even as they helped create an environment that greatly increased Iran’s and the Houthis’ leverage over the global energy market.
Long story short, U.S. and European sanctions on Russian oil have made Europe, and the world in general, more reliant on Middle Eastern oil, gas, and diesel, a large portion of which is now under attack by Iran and the Houthis.
On the positive side, the sanctions on Russian oil have benefited U.S. oil producers, enabling them to make massive profits selling oil and gas to desperate Europeans at much higher prices than Russian oil.
Hence, it’s the sanctions on Russian oil that put U.S. consumers in direct competition with Europe for oil, gas, and diesel produced right here in the United States, and that has meant higher gas prices for U.S. consumers that would have been far worse without President Donald Trump’s first- and second-term efforts that radically expanded U.S. energy production.
Before the full-scale war in Ukraine began in 2022, Europe relied heavily on Russian energy. Russia provided nearly half of the European Union’s natural gas imports and a large portion of its crude oil.
More than half of the diesel used by trucks, farms, construction crews, and factories in Northwest Europe came from Russia. And being more locally produced, it was much less expensive than diesel from the United States or the Middle East, allowing European industry to be competitive.
Sanctions changed that. Europe banned most shipments of Russian oil products, including diesel, starting in early 2023. Russian diesel deliveries to Northwest Europe fell from over half of the total to almost none.
European buyers quickly turned to other sources, especially the Middle East, India, and the United States. Saudi Arabia increased its diesel sales to Europe. New refineries in places such as Kuwait and Saudi Arabia began shipping more fuel across the Mediterranean and beyond.
At the same time, the United States exported more crude oil, liquefied natural gas, and diesel to Europe, with the much higher prices being the primary cause of the catastrophic deindustrialization of Europe.
But even as the European economy has crashed, American oil and gas companies, no longer having to compete with cheap locally produced oil and gas, have seen profits and revenues soar, as a desperate Europe has been forced to pay much higher prices for Middle East and U.S. fossil fuels.
Since 2022, U.S. crude oil exports to Europe have risen to about 1.5 million to 1.8 million barrels per day. Shipments of liquefied natural gas to Europe more than doubled compared with 2021. Diesel exports from U.S. Gulf Coast refineries to Europe also increased, sometimes amounting to several hundred thousand barrels per day.
Unfortunately, the siren call of windfall revenues and profits from a desperate Europe has raised costs for ordinary Americans. With U.S. oil companies incentivized by higher prices to export more oil, natural gas, and diesel to Europe, less of that fuel has been available for domestic consumption by American households, truckers, farmers, and manufacturers who are now forced to compete with Europe for U.S. fossil fuels.
One analysis found that the rush for natural gas in 2021 and 2022, caused by Europe’s need to replace Russian supplies and by growing U.S. exports, cost American consumers and businesses roughly $111 billion more for wholesale natural gas over a 16-month period. Overall, U.S. spending on natural gas rose from about $150 billion in 2019 to $269 billion in 2022.
Similar pressure affected diesel and gasoline as European demand pulled more American fuel out of the country. These higher costs for U.S. consumers were already clear in 2022 and 2023, long before the later fighting involving Iran and the Houthis.
While it’s true the Trump administration’s expansion of domestic energy production has mitigated some of the cost increases, it is also true that if Russian oil had not been sanctioned, greater supplies and more resilience in the world oil market would have resulted in even lower energy costs.
Europe, in particular, suffered heavily. Losing access to relatively cheap Russian oil and gas raised energy bills for factories and households, crushing its GDP and leaving Europe much more dependent on Middle East oil.
Then, beginning in late February 2026, fighting between the United States, Israel, and Iran led Iran and the Houthis first to disrupt oil shipments and then begin attacking actual oil production.
Even as this was happening, a Ukraine that has greatly benefited from U.S. real-time battlefield support and the irreplaceable Starlink network for control of its drones was ramping up its drone-based attacks on Russia’s oil infrastructure, forcing Russia to reduce diesel, gas, and oil exports further.
Adding to the current crisis, China, acting to protect itself from the oil shock, has been limiting some of its fuel exports. Together, these events removed an estimated 6 to 8 million barrels per day of refining capacity worldwide, roughly one-tenth of the global total.
This has added up to tighter supplies of diesel and other fuel, and higher prices for drivers and businesses in the United States. Even if shipping through the Strait of Hormuz returns to normal, fuel prices in the United States are likely to stay higher than they would have had not so much refining capacity been taken out of service.
No doubt, the sanctions on Russian oil have reduced Russia’s energy revenue and forced it to sell oil at discounts to China, India, etc., but the cost to the world and the United States has been huge, with many other negative consequences potentially far more damaging than the temporary rise in energy prices.
This begs the question: given that my analysis indicates that Russia is poised to win the war against a thoroughly devastated Ukraine, just how does continuing to provide the real-time battlefield intel and Starlink access to Ukraine, dragging the war out, really advance U.S. interests?
It’s time to end the war that continues to empower Iran and the Houthis by mandating that Ukraine negotiate a peace deal that puts aside fantasy thinking and accepts battlefield realities, or suffer the loss of the U.S.-provided real-time battlefield intel that has allowed it to last so long.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.
