The dispute centred on an exception granted to California on national vehicle emission standards, allowing it to set stricter rules than federal standards.
The United States Supreme Court has sided with fuel producers that had opposed California’s standards for vehicle emissions and electric cars under a federal air pollution law, agreeing that their legal challenge to the mandates should not have been dismissed.
The justices in a 7-2 ruling on Friday overturned a lower court’s decision to dismiss the lawsuit by a Valero Energy subsidiary and fuel industry groups. The lower court had concluded that the plaintiffs lacked the required legal standing to challenge a 2022 US Environmental Protection Agency decision to let California set its own regulations.
“The government generally may not target a business or industry through stringent and allegedly unlawful regulation, and then evade the resulting lawsuits by claiming that the targets of its regulation should be locked out of court as unaffected bystanders,” conservative Justice Brett Kavanaugh wrote for the majority.
Liberal Justices Sonia Sotomayor and Ketanji Brown Jackson dissented from the decision.
The dispute centred on an exception granted to California during Democratic former President Joe Biden’s administration to national vehicle emission standards set by the agency under the landmark Clean Air Act anti-pollution law.
Though states and municipalities are generally preempted from enacting their own limits, Congress let the EPA waive the preemption rule to let California set certain regulations that are stricter than federal standards.
The EPA’s 2022 action reinstated a waiver for California to set its own tailpipe emissions limits and zero-emission vehicle mandate through 2025, reversing a 2019 decision made during Republican President Donald Trump’s first administration rescinding the waiver.
Valero’s Diamond Alternative Energy and related groups challenged the reinstatement of California’s waiver, arguing that the decision exceeded the EPA’s power under the Clean Air Act and inflicted harm on their bottom line by lowering demand for liquid fuels.
The US Court of Appeals for the District of Columbia Circuit threw out the lawsuit in 2024, finding that the challengers lacked the necessary standing to bring their claims because there was no evidence that a ruling in their favour might affect the decisions of auto manufacturers in a way that would result in fewer electric and more combustion vehicles to be sold.
Sceptical court
California, the most populous US state, has received more than 100 waivers under the Clean Air Act.
The Supreme Court, which has a 6-3 conservative majority, has taken a sceptical view towards broad authority for federal regulatory agencies and has restricted the powers of the EPA in some important rulings in recent years.
In 2024, the court blocked the EPA’s “Good Neighbor” rule aimed at reducing ozone emissions that may worsen air pollution in neighbouring states. In 2023, the court hobbled the EPA’s power to protect wetlands and fight water pollution. In 2022, it imposed limits on the agency’s authority under the Clean Air Act to reduce coal and gas-fired power plant carbon emissions.
Crude oil prices jump more than 4 percent amid fears the US may join Israel’s offensive against Iran.
Oil prices have spiked amid fears that the Israel-Iran crisis could spiral into a broader conflict involving the United States.
Brent North Sea Crude and West Texas Intermediate – the two most popular oil benchmarks – rose 4.4 percent and 4.3, respectively, on Tuesday as US President Donald Trump demanded “unconditional surrender” from Tehran.
The benchmarks stood at $76.45 per barrel and $74.84 per barrel, respectively, following the jump.
Oil prices edged up further in early trading on Wednesday, with both benchmarks about 0.5 percent higher as of 03:30 GMT.
US stocks fell on the rising geopolitical tensions overnight, with the benchmark S&P500 and tech-heavy Nasdaq Composite declining 0.84 percent and 0.91 percent, respectively.
Israel has bombed multiple oil and gas facilities in Iran since Friday, including the South Pars gasfield, the Fajr Jam gas plant, the Shahran oil depot and the Shahr Rey oil refinery.
While there has been little disruption to global energy flows so far, the possibility of escalation – including direct US involvement in Israel’s military offensive – has put markets on edge.
On Tuesday, Trump ratcheted his rhetoric against Iran, adding to fears that his administration could order a military strike against Iran’s uranium enrichment facility at Fordow.
In a thinly veiled threat against Iranian Supreme Leader Ayatollah Ali Khamenei, Trump said in a Truth Social post that the US knew his location but did not want him killed “for now”.
Iran has the world’s third-largest reserves of crude oil and second-largest reserves of gas, though its reach as an energy exporter has been heavily curtailed by US-led sanctions.
The country produced about 3.99 million barrels of crude oil per day in 2023, or 4 percent of global supply, according to the US Energy Information Administration.
Iran also sits on the Strait of Hormuz, which serves as a conduit for 20-30 percent of global oil shipments.
Nearly all of Iran’s oil exports leave via the Kharg Island export terminal, which has so far been spared from Israeli bombing.
“In the context of seeking to destabilize Iran, Israel may choose to strike its oil exports, believing that working to finish off a hostile regime is worth the risk of alienating allies concerned with potential price escalation,” Clayton Seigle, a senior fellow at the Center for Strategic and International Studies in Washington, DC, wrote in an analysis on Monday.
“Israeli strategists are likely well aware that Iran’s oil export capacity is quite vulnerable to disruption. Its offshore oil export terminal at Kharg Island accounts for nearly all of its 1.5 million barrels per day average export volume.”
Israel and Iran are engaged in attacks for a fifth straight day, with Israel targeting Iran’s nuclear facilities, military sites, oil and gas facilities, and state TV headquarters.
The escalation has raised fears of a widening conflict and turmoil in global energy markets.
Iran is one of the top global producers of oil and gas and holds the world’s second largest proven natural gas reserves and the thirdlargest crude oil reserves, according to the United States Energy Information Administration.
How big is Iran’s oil industry?
With about 157 billion barrels of proven crude oil, Iran holds about a quarter (24 percent) of the Middle East’s and 12 percent of the world’s proven oil reserves.
Iran is the ninth largest oil producer globally and the fourth largest within OPEC, producing about 3.3 million barrels of crude oil per day. It exports roughly 2 million barrels of crude and refined fuel each day.
In 2023, Iran’s net oil export revenues were estimated at $53bn, up sharply from $37bn in 2021. While Iran’s economy is relatively diversified compared with many of its neighbours, oil continues to be a critical source of government income.
However, years of limited foreign investment and international sanctions have kept Iran’s oil production well below its full potential.
After Israel’s attacks on Iran began on Friday, fears of a wider Middle East conflict sent oil prices soaring nearly 7 percent in a single day. Prices have held steady about that level since.
Where are Iran’s oil facilities?
Iran’s oil facilities are spread across several regions, mainly in the south and west of the country. These include onshore oilfields, offshore platforms, refineries, export terminals and pipelines.
Nearly all of Iran’s crude oil flows through Kharg Island, the country’s main export terminal, which handles close to 1.5 million barrels per day.
More than 20 percent of the world’s seaborne oil passes through the Strait of Hormuz, a narrow maritime chokepoint between Iran and Oman.
Major onshore oilfields include:
Ahvaz Field – Iran’s largest oilfield and one of the biggest globally
Gachsaran Field – second-largest Iranian field, producing light crude
Marun Field – another high-output field near Ahvaz
Agha Jari, Bibi Hakimeh and Karanj fields – located mostly within Khuzestan province in southwestern Iran, a key oil-producing region
Major offshore fields include:
Abuzar, Foroozan, Doroud and Salman fields – located in the Gulf and shared with Saudi Arabia and the United Arab Emirates
Its main refineries include:
Abadan Refinery – one of the oldest and largest refineries in the Middle East
Tehran Refinery – supplies the capital and nearby provinces
Isfahan, Bandar Abbas, Arak and Tabriz refineries – process various crude types for domestic use and export
How big is Iran’s gas industry?
Iran has the world’s second largest proven natural gas reserves after Russia. They are estimated at 1,200 trillion cubic feet (34 trillion cubic metres), which accounts for 16 percent of global reserves and 45 percent of OPEC’s total.
Iran is the third highest producer of natural gas behind the US and Russia with production reaching 9,361 billion cubic feet (265 billion cubic metres) in 2023, accounting for at least 6 percent of global production.
Like oil, Iran relies heavily on domestic companies to develop its gasfields due to international sanctions, which have limited foreign investment and technology access.
Where are Iran’s gas facilities?
Iran’s gas facilities are concentrated primarily in the south, especially along the Gulf, with major gasfields and processing plants.
Iran’s largest gasfield, and the largest in the world, is the South Pars field, which it shares with Qatar, where it’s known as the North Field.
Other important gasfields are the North Pars, Golshan, Ferdowsi, Kangan and Nar fields.
Iran’s main gas-processing centre is the South Pars Gas Complex, located in Bushehr province.
Sao Paulo, Brazil – In the far north of Brazil, where the Amazon River collides with the sea, an environmental dilemma has awakened a national political debate.
There, the Brazilian government has been researching the possibility of offshore oil reserves that extend from the eastern state of Rio Grande do Norte all the way to Amapá, close to the border with French Guiana.
That region is known as the Equatorial Margin, and it represents hundreds of kilometres of coastal water.
But critics argue it also represents the government’s conflicting goals under Brazilian President Luiz Inácio Lula Da Silva.
During his third term as president, Lula has positioned Brazil as a champion in the fight against climate change. But he has also signalled support for fossil fuel development in regions like the Equatorial Margin, as a means of paying for climate-change policy.
“We want the oil because it will still be around for a long time. We need to use it to fund our energy transition, which will require a lot of money,” Lula said in February.
But at the start of his term in 2023, he struck a different stance. “Our goal is zero deforestation in the Amazon, zero greenhouse gas emissions,” he told Brazil’s Congress.
As the South American country prepares to host the United Nations Climate Change Conference (COP30) later this year, those contradictions have come under even greater scrutiny.
Nicole Oliveira is one of the environmental leaders fighting the prospect of drilling in the Equatorial Margin, including the area at the mouth of the Amazon River, known as Foz do Amazonas.
Her organisation, the Arayara Institute, filed a lawsuit to block an auction scheduled for this week to sell oil exploration rights in the Equatorial Margin. She doubts the government’s rationale that fossil-fuel extraction will finance cleaner energy.
“There is no indication of any real willingness [from the government] to pursue an energy transition,” Oliveira said.
“On the contrary, there is growing pressure on environmental agencies to issue licenses and open up new areas in the Foz do Amazonas and across the entire Equatorial Margin.”
Last Thursday, the federal prosecutor’s office also filed a lawsuit to delay the auction, calling for further environmental assessments and community consultations before the project proceeds.
A drill ship operated by the state-run oil company Petrobras floats in the Guanabara Bay near Rio de Janeiro, Brazil, on May 20 [Pilar Olivares/Reuters]
A government reversal
The fate of the Equatorial Margin has exposed divisions even within Lula’s government.
In May 2023, the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA) — the government’s main environmental regulator — denied a request from the state-owned oil company Petrobras to conduct exploratory drilling at the mouth of the Amazon River.
In its decision, the IBAMA cited environmental risks and a lack of assessments, given the site’s “socio-environmental sensitivity”.
But Petrobras continued to push for a licence to drill in the region. The situation escalated in February this year when IBAMA again rejected Petrobras’s request.
Lula responded by criticising the agency for holding up the process. He argued that the proceeds from any drilling would help the country and bolster its economy.
“We need to start thinking about Brazil’s needs. Is this good or bad for Brazil? Is this good or bad for Brazil’s economy?” Lula told Radio Clube do Para in February.
On May 19, the director of IBAMA, a politician named Rodrigo Agostinho, ultimately overruled his agency’s decision and gave Petrobras the green light to initiate drilling tests in the region.
Petrobras applauded the reversal. In a statement this month to Al Jazeera, it said it had conducted “detailed environmental studies” to ensure the safety of the proposed oil exploration.
It added that its efforts were “fully in line with the principles of climate justice, biodiversity protection, and the social development of the communities where it operates”.
“Petrobras strictly follows all legal and technical requirements established by environmental authorities,” Petrobras wrote.
It also argued that petroleum will continue to be a vital energy source decades into the future, even with the transition to low-carbon alternatives.
Roberto Ardenghy, the president of the Brazilian Petroleum and Gas Institute (IBP), an advocacy group, is among those who believe that further oil exploitation is necessary for Brazil’s continued growth and prosperity.
“It is justified — even from an energy and food security standpoint — that Brazil continues to search for oil in all of these sedimentary basins,” he said.
Ardenghy added that neighbouring countries like Guyana are already profiting from “significant discoveries” near the Equatorial Margin.
“Everything suggests there is strong potential for major oil reservoirs in that region. The National Petroleum Agency estimates there could be around 30 billion barrels of oil there. That’s why we’re making such a major effort,” he said.
A flock of scarlet ibis stands on the banks of a mangrove forest near the Foz do Amazonas in April 2017 [Ricardo Moraes/Reuters]
A ‘risk of accidents’
But critics have argued that the area where the Amazon River surges into the ocean comprises a delicate ecosystem, lush with mangroves and coral reefs.
There, the pink-bellied Guiana dolphin plies the salty waters alongside other aquatic mammals like sperm whales and manatees. Environmentalists fear exploratory drilling could further endanger these rare and threatened species.
Indigenous communities at the mouth of the river have also resisted Petrobras’s plans for oil exploration, citing the potential for damage to their ancestral fishing grounds.
In 2022, the Council of Chiefs of the Indigenous Peoples of Oiapoque (CCPIO) formally requested that the federal prosecutor’s office mediate a consultation process with Petrobras, which has not taken place to this date.
The federal prosecutor’s office, in announcing Thursday’s lawsuit, cited the risk to Indigenous peoples as part of its reasoning for seeking to delay the auction.
“The area is home to a vast number of traditional peoples and communities whose survival and way of life are directly tied to coastal ecosystems,” the office said.
However, in its statement to Al Jazeera, Petrobras maintains it had a “broad communication process” with local stakeholders. It added that its studies “did not identify any direct impact on traditional communities” resulting from the drilling.
But some experts nevertheless question the safety of oil exploration in the region, including Suely Araujo, who used to chair IBAMA from 2016 to 2018.
Now the public policy coordinator for the advocacy coalition Observatório do Clima, Araujo pointed to practical hurdles like the powerful waters that gush from the Amazon River into the ocean.
“The area is quite complex, with extremely strong currents. Petrobras has no previous exploration experience in a region with currents as strong as these,” Araujo said. “So it’s an area that increases the risk of accidents even during drilling.”
Still, she fears there is little political will within the Lula government to stop the oil exploration — and that awarding drilling licences could be a slippery slope.
“All the evidence is there for this licence to be approved soon,” she said, referring to the project planned near the river mouth.
“The problem is that if this licence gets approved — let’s say, the 47 new blocks in the Foz do Amazonas that are now up for auction — it will become very difficult for IBAMA to deny future licences, because it’s the same region.”
Oliveira, whose organisation is leading the legal fight against the exploration licences, echoed that sentiment. She said it is necessary to stop the drilling before it starts.
“If we want to keep global warming to 1.5 degrees [Celsius], which is where we already are,” she said, “we cannot drill a single new oil well”.
As Israel and Iran exchange deadly salvoes for a fourth day, there are growing concerns that the conflict will spread across one of the world’s key oil- and gas-producing regions. Equity markets initially were roiled after Israel’s surprise attack on Friday but have since stabilised.
A day after Israel killed several of Iran’s top military commanders and nuclear scientists and damaged some of its nuclear sites, Israel then hit Iran’s fossil fuel sector on Saturday with Iranian state media reporting a blaze at the South Pars gasfield. More than 220 people have been killed in the Israeli attacks, including at least 70 women and children, according to Iranian authorities.
Iran responded with a barrage of ballistic missile and drone strikes, a small percentage of which succeeded in penetrating Israeli defences, killing at least 24 people.
On his Truth Social platform, United States President Donald Trump warned Tehran that the next “already planned attacks” would be “even more brutal”, adding: “Iran must make a deal [on its nuclear programme] before nothing is left.”
As the conflict between the Middle East’s two most powerful militaries spirals towards a full-fledged war, financial markets and the aviation sector are taking a hit. Analysts are watching oil prices, and investors are turning to safe havens like gold.
And a full-blown war could make things even worse – much worse, experts warned.
What has happened to the price of oil?
Brent crude, the global benchmark, rallied to $74.60 per barrel early on Monday.
That marked an almost 7 percent increase from Thursday, the day before Israel launched its surprise attack.
Much of the world’s oil and other key commodities such as natural gas pass through busy sea lanes in the Middle East, including the Strait of Hormuz.
The strait, a narrow waterway separating Iran from the Gulf states, links the Arabian Sea to the Indian Ocean.
It is a conduit for one-third of the world’s seaborne oil supplies, channelling roughly 21 million barrels every day.
At its narrowest point, it is 33km (21 miles) wide. Shipping lanes in the waterway are even narrower, making them vulnerable to attack.
The conflict between Israel and Iran has revived a decades-old question of whether Tehran will close the maritime chokepoint, triggering an oil price rally.
Quoting key conservative lawmaker Esmail Kosari, the Iranian news agency IRINN reported that Tehran is considering closing the strait as the conflict with Israel intensifies.
According to Goldman Sachs, a worst-case scenario involving blockades in the Strait of Hormuz could push oil prices above $100 per barrel.
Still, during the Iran-Iraq War from 1980 to 1988, in which both countries targeted commercial vessels in the Gulf, Hormuz was never completely closed.
What’s more, attempts to block the Strait of Hormuz would likely disrupt Tehran’s own exports, especially to China, cutting off valuable revenue.
According to Hamzeh Al Gaaod, an economic analyst at TS Lombard, a strategy and political research firm, “the repercussions to closing off the strait would be severe for Tehran itself.”
Have global inflation rates been affected?
When oil prices rise, the cost of production also goes up. This is eventually passed on to consumers, especially for energy-intensive goods like food, clothing and chemicals.
Oil-importing countries around the world could experience higher inflation and slower economic growth if the conflict persists.
Looking ahead, analysts warned that central banks would face reduced policy flexibility in trying to control rising prices.
“Central bankers from the G7 are currently on an [interest rate] cutting cycle, and so will be worried about a potential energy price shock,” Al Gaaod told Al Jazeera.
The Bank of England has recently slashed the United Kingdom’s base interest rate to 4.25 percent although the US Federal Reserve has held off on cutting rates in the wake of Trump’s tariffs, imposed on almost all countries since he returned to power in January.
How have markets responded?
Wall Street has taken a hit. On Friday, the S&P 500 and Nasdaq Composite indices shed 1.1 and 1.3 percent, respectively. In the Middle East, Egypt’s benchmark EGX 30 index fell 7.7 percent on Sunday while the Tel Aviv Stock Exchange 35 Index dropped 1.5 percent.
European equities also drifted down on the news of Israel’s attacks. Germany’s DAX and France’s CAC 40 fell a little more than 1.1 percent at the end of last week while the UK’s FTSE 100 ended 0.5 percent lower on Friday.
Still, some UK companies rallied. BAE Systems, a defence contractor, was up almost 3 percent on Friday, reflecting concerns that tensions could escalate.
In the US, share prices of military suppliers, including Lockheed, Northrop Grumman and RTX, also rose.
Elsewhere, oil companies BP and Shell gained in value with the former closing nearly 2 percent higher and the latter closing at just more than 1 percent higher.
The price of gold was also trading about 1 percent higher on Friday at $3,426 an ounce, close to the record high of $3,500 it hit in April.
On Monday, investors tempered some of their risk-off positioning with oil and gold prices falling and stock prices rising.
“It seems that markets are anticipating the conflict will remain relatively contained. Crucially, Iran has not attacked any US military assets in the region,” Al Gaaod said.
What has the impact been on the aviation sector with airspace closures?
Several airlines have suspended or cancelled flights in the Middle East, and some countries have shut their airspace.
Here is a list of some suspended and rerouted flights:
Emirates, the Middle East’s largest airline, said it has suspended flights to and from Iraq, Jordan, Lebanon and Iran until June 30 with flights to Lebanon halted until Sunday.
Etihad Airways has cancelled all flights between Abu Dhabi and Tel Aviv until Sunday. The airline is also rerouting several other services and has advised customers to await updates regarding their flight status.
Qatar Airways has temporarily cancelled flights to Iran, Iraq and Syria due to ongoing tensions with passengers advised to check the status of their flights before travel.
Elsewhere, Iran’s official news agency IRNA reported that aviation authorities have shut down the country’s airspace until further notice.
On Friday, Iraq also closed its airspace and suspended all traffic at its airports, Iraqi state media reported. Eastern Iraq is home to one of the world’s busiest air corridors. Dozens of flights cross there at any one moment, flying between Europe and the Gulf – many on routes from Asia to Europe.
Jordan’s civil aviation authority said it had “temporarily” closed Jordanian airspace “in anticipation of any dangers resulting from the escalation happening in the region”.
For Al Gaaod, “there may be short-term disruption for Middle East tourism but only for a month or so. I suspect tourism will bounce back.”
He made a similar prediction about global financial markets: “So long as strikes remain contained, I think equity prices will continue to recover from last week.”
Israel has struck some of Iran’s most vital oil and gas facilities, the first such attacks despite decades of rivalry between the Middle Eastern nations, raising fears of a widening conflict and threatening turmoil for the markets.
Late on Saturday, Iran’s Ministry of Petroleum said Israel struck a key fuel depot, while another oil refinery in the capital city of Tehran was also in flames, as emergency crews scrambled to douse the fires at separate sites.
Iran has also partially suspended production at the world’s biggest gasfield, the South Pars, which it shares with neighbour Qatar, after an Israeli strike caused a fire there on Saturday.
The latest round of exchange of projectiles began on Friday after Israel launched attacks on Iran’s military and nuclear sites and assassinated several top military officials and nuclear scientists. Tehran retaliated by firing ballistic missiles and drones at multiple cities in Israel amid global calls for de-escalation.
According to Iranian state media, Israeli attacks have killed at least 80 people, including 20 children, and wounded 800 others over the past two days. Israeli authorities said that 10 people had been killed in Iranian strikes, with over 180 injured.
Israel’s unprecedented and sudden attacks on Iran’s energy facilities are poised to disrupt the oil supplies from the Middle East, and could shake up global fuel prices, even as both countries threaten each other with even more intense attacks.
So, what are the key energy sites in Iran hit in Israeli attacks? And why do they matter?
Which major facilities were hit in Israeli attacks?
Iran holds the world’s second-largest proven natural gas reserves and the third-largest crude oil reserves, according to the United States government’s Energy Information Administration (EIA), and its energy infrastructure has long been a potential target for Israel.
Before the current spiral in their conflict, Israel had largely avoided targeting Iranian energy facilities, amid pressure from its allies, including the US, over the risks to global oil and gas prices from any such attack.
That has now changed.
On Friday, Israel’s Defence Minister Israel Katz warned that if Iran retaliated to its attacks, “Tehran will burn”.
Late on Saturday, major fires broke out at two opposing ends of the Iranian capital — the Shahran fuel and gas depot, northwest of central Tehran, and one of Iran’s biggest oil refineries in Shahr Rey, to the city’s south.
While Iran’s Student News Network subsequently denied that the Shahr Rey refinery had been struck by Israel, and claimed it was still operating, it conceded that a fuel tank outside the refinery had caught fire. It did not explain what sparked the fire.
But Iran’s Petroleum Ministry confirmed that Israel had struck the Shahran depot, where firefighters are still trying to bring flames under control.
The Israeli aerial attacks also targeted the South Pars field, offshore Iran’s southern Bushehr province. The world’s largest gasfield is the source of two-thirds of Iran’s gas production, which is consumed nationally. Iran shares the South Pars with its neighbour Qatar, where it is called the North Field.
The strikes triggered significant damage and fire at the Phase 14 natural gas processing facility and halted an offshore production platform that generates 12 million cubic metres per day, reported the semiofficial Tasnim news agency.
In a separate Israeli attack, fire reportedly broke out at the Fajr Jam gas plant, one of Iran’s largest processing facilities, also in the Bushehr province, which processes fuel from South Pars. The Iranian Petroleum Ministry confirmed that the facility was hit.
Why are these sites important?
The Shahran oil depot is one of Tehran’s largest fuel storage and distribution hubs. It has nearly 260 million litres of storage capacity across 11 tanks. It is a vital node in the capital’s urban fuel grid, distributing petrol, diesel, and aviation fuel to several terminals across northern Tehran.
The Tehran Refinery, located just south of Tehran, in the Shahr-e Rey district, operated by the state-owned Tehran Oil Refining Company, is one of the country’s oldest refineries, with a refining capacity of nearly 225,000 barrels per day. Experts warn that any disruption to this site — whatever the cause of the fire — could strain fuel logistics in Iran’s most populous and economically significant region.
Down south, the offshore South Pars gasfield in the Gulf contains an estimated 1,260 trillion cubic feet of recoverable gas, accounting for nearly 20 percent of known global reserves.
Meanwhile, the hit on the Fajr-e Jam Gas Refinery, in Bushehr province, threatens to disrupt Iran’s domestic electricity and fuel supplies, particularly for the southern and central provinces, which are already under huge stress. In Iran, blackouts cost the economy about $250m a day, according to the government’s estimates.
Uncertain global markets
Adding to the uncertainty in global markets, Iran has noted that it is considering closing the Strait of Hormuz amid the intensifying conflict with Israel – a move that would send oil prices soaring.
The Strait of Hormuz, which splits Iran on one side and Oman and the United Arab Emirates on the other, is the only marine entryway into the Gulf, with nearly 20 percent of global oil consumption flowing through it. The EIA describes it as the “world’s most important oil transit chokepoint”.
The Israeli attacks on Friday, which spared Iran’s oil and gas facilities on the first day of the fighting, had already pushed oil prices up 9 percent, before they calmed just a bit. Analysts expect prices to rise sharply when oil markets open again on Monday.
Alan Eyre, a distinguished diplomatic fellow at the Middle East Institute, told Al Jazeera that Israel was trying to push the US into participating in its attacks on Iran. “Ultimately, Israel’s best case scenario is to encourage, if not regime change, then the toppling of this regime,” he said.
“Iran’s options are very limited; they have to respond militarily to save face domestically [but] it is very unlikely that Iran can cause enough damage to Israel internally or put enough pressure to stop bombing,” Eyre said.
“Iran does not have many allies in the international community – and even if it did, Israel has shown that it is spectacularly unwilling to listen to international opinion,” added Eyre.
The unfolding Israel-Iran conflict will “immensely” dominate the upcoming gathering of the leaders of the Group of Seven, not just because of the dangers of further escalation, but also because of the “sheer uncertainty” of United States policy under President Donald Trump, experts say.
The informal G7 grouping of the world’s seven advanced economies is set to meet from June 15 to 17 in Kananaskis, Alberta.
Holding the current presidency of the G7, Canada is hosting this year. While the agenda items will change in importance, depending on how things evolve in the Middle East, the latest crisis is already set to shift focus from what was expected to be a platform for host Canadian Prime Minister Mark Carney to showcase his leadership at home and to a global audience.
The G7 countries include Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, as well as the European Union. In addition, the host country typically invites the heads of a handful of other countries, usually because they are deemed important to global and economic affairs. Canada has invited India, Saudi Arabia, Ukraine along with a few others.
Carney is likely to have been hoping to avoid a repeat of the last time US President Donald Trump attended – also in Canada – in 2018. That was when he refused to sign the final communique – which G7 countries usually issue in a show of unity at the end of the summit – and left early, calling then-Canadian Prime Minister Justin Trudeau “very dishonest and weak”.
As a result of that spectacle, Carney was planning not to press for a joint communique at all this year – instead he was gearing up to write his own “chair’s summary” and seek agreement on a set of specific issues. Presenting an image of unity against a backdrop of looming, aggressive US trade tariffs, is the main aim.
But Robert Rogowsky, professor of trade and economic diplomacy at the Middlebury Institute of International Studies, said there is no way G7 members can avoid the subject of the latest crisis in the Middle East, which was triggered by a massive Israeli assault on military and nuclear sites in Iran on early Friday morning – and has since prompted retaliatory strikes by Iran. The US said it was not involved in the Israeli strike on Iran, but Trump told reporters on Friday that it was informed of the attack in advance.
“That attack, counterattack, and the US declaration that it was not involved and its warning about staying away from American assets as targets is likely to be the first thing discussed, as it now creates the possibility of a real, all-out war in the Middle East. The major neighbouring parties will have to decide how to align themselves,” Rogowsky said.
A ‘crisis response’ group?
The G7 “was designed to be a crisis response group with the ability to act and adapt quickly to international challenges … so in some ways, it’s good they’re meeting this weekend as they’ll have the ability to respond quickly”, said Julia Kulik, director of strategic initiatives for the G7 Research Group, among others, at Trinity College at the University of Toronto.
Even before this latest flare-up, the G7 in its 51st year comes “at a hinge moment because of economic disruptions and but also because of geopolitical shifts,” said Vina Nadjibulla, vice president and head of research at the Asia Pacific Foundation of Canada. Nadjibulla was referring to the global tariffs unleashed earlier this year by Trump as well as a shifting foreign policy for the US under his leadership, with old alliances no longer cared for, as well as an “America First” message.
Against that backdrop, “Prime Minister Carney has been trying to meet the moment and be as purposeful as possible,” Nadjibulla added, pointing to the list of priorities Canada announced last week ahead of the summit.
That list focuses on strengthening global peace and security, including by countering foreign interference and transnational crime, as well as improving responses to wildfires; spurring economic growth by improving energy security, and bringing in public-private partnerships to spur investments.
The priorities announced, important domestically but also internationally, are a “testament” to Carney’s intentions, and “building the economy is front and centre”, said Nadjibulla.
Conversations on global peace would have focused on the Russia-Ukraine conflict and Israel’s war on Gaza but attention will now pivot to Iran, said Kulik, “and there will be tough questions from other leaders around the table to Donald Trump about what went wrong with the negotiations and about what he’s going to do to get Israel to de-escalate before things get worse”.
Trump is a ‘coin flip’
Experts were already on the lookout for flare-ups at the upcoming three-day event with the mercurial Trump in attendance.
“His reactions are very emotional and performative, so it could be any of those and that could decide the dynamics of the G7,” said Rogowsky. “If he comes in wanting to build some bridges, then it could be a success, but if he wants to make a point, and this is another world wrestling federation for him, then [it can go anywhere]. With Trump, it’s a coin flip.”
But despite the Iran-Israel face-off, the G7 will still be an opportunity for Carney to set the tone at a complex time of tariff wars and slowing domestic and global economies. He is also aware that Canada has to “up its political game” and find new ways of boosting its economy and security. That is particularly visible in the invitation to Indian Prime Minister Narendra Modi, as Canada has had diplomatic tensions with India over the 2023 killing of a Sikh leader on Canadian soil in the recent past.
This shows that Carney is aware that to make progress on his agenda items, he will “need to work with countries that you may have disagreements with, but you can’t let those issues dictate the big picture,” said Nadjibulla. “Carney is setting the stage for a consequential meeting.”
Rogowsky added: “Carney is a globalist and wants to allow Canada to become a force in unity, in a multilateral system. I see him as taking on a role as a bridge builder. Maybe he’s the one guy who can pull this off.”
At the same time, he said, “it will be interesting to see how the other leaders approach Trump. Will it be a case of kowtow to the ruler, or he’s the bully on the playground and we’re going to stand up to him.”
For Rogowsky, the “cayenne pepper” in the meeting is the expected presence of Ukrainian President Volodymyr Zelenskyy, who was berated by Trump and US Vice President JD Vance in the White House on live television for not being “grateful” enough for US assistance.
The three-day event follows initial meetings in May between finance ministers and central bank governors belonging to G7 countries in Banff.
As airlines suspend flights to Tel Aviv, Tehran and other airports across the region, oil companies, shipping firms, and regulatory agencies are scrambling amid growing concerns that key trade routes like the Strait of Hormuz could be caught in the crossfire.
Merchant shipping is still passing through the Strait of Hormuz, but with increased caution. Iran has previously threatened to close this critical trade route in response to Western pressure. Even the suggestion of such a move has already sent shockwaves through global markets, and the price of oil has risen.
United States President Donald Trump’s latest rhetoric has done little to ease those concerns. He warned that if Iran does not “make a deal”, there could be more “death and destruction”.
“If the United States is perceived to be involved in any attacks, the risk of escalation increases significantly,” Jakob Larsen, chief safety and security officer with shipping association BIMCO, told the Reuters news agency.
Oil Prices Rise
As of 4:00pm in New York (20:00 GMT), Brent crude prices, which are considered the international standard, are 5 percent higher than yesterday’s market close.
Oil futures spiked more than 13 percent at one point, reaching their highest levels since January.
Any closure of the Strait of Hormuz, a strategic trade route between the Arabian Gulf and the Gulf of Oman, through which roughly 20 percent of the world’s global oil output travels, would likely drive oil prices even higher. This could intensify inflationary pressures globally, and particularly in the US.
The price surge comes on the heels of a better-than-expected Consumer Price Index report in the US earlier this week, which showed prices increased by just 0.1 percent for the month. Energy costs remain a key inflation driver. Petrol prices, in fact, fell 2.6 percent during the period. Consumer sentiment, too, jumped for the first time in six months as tariff fears eased. However, the new conflict could cut short the relief that US consumers had expressed, according to analysts from JPMorgan Chase.
Wait and see
“Sustained gains in energy prices could have a dire impact on inflation, reversing the months-long trend of cooling consumer prices in the US,” commodity researchers for JPMorgan Chase said in a note released on the heels of the strike. “We continue to believe that any political policies that might drive oil and inflation higher would likely yield to Trump’s primary objective of maintaining low energy prices—a campaign promise,” analysts Natasha Kaneva, Prateek Kedia, and Lyuba Savinova wrote.
The markets more broadly dropped on the news. The S&P 500 tumbled 1.1 percent, the Dow Jones Industrial Average is down 1.7 and the Nasdaq is 1.3 percent lower.
“Today, as you can see from the markets, whether it’s the S&P, whether it’s Bitcoin, things have been kind of stable or flat. So there’s a little bit of a wait-and-see approach. Oil is acutely affected simply because Iran is such a significant part of the global oil supply. But thus far, Israel has refrained from hitting in any severe fashion the oil infrastructure of Iran. Should that change, that will obviously have a much more dramatic impact,” Taufiq Rahim, an independent geopolitical strategist and Principal for the 2040 Advisory, told Al Jazeera.
If shipping through the critical seaway were suspended, even temporarily, the International Energy Agency said it is well supplied to release emergency reserves, if needed. However, that comes with the risk of depletion.
There are 1.2 billion barrels in its strategic reserves. The world uses about 100 million barrels of oil per day.
“If it does rise to the level of closing the Strait of Hormuz, well, now that’s going to be the biggest oil shock of all time,” Matt Gertken, chief geopolitical strategist and senior vice president at BCA Research, a macroeconomic research firm, told Al Jazeera.
OPEC Secretary-General Haitham al-Ghais criticised the IEA for its statement that it could release strategic reserves, saying it “raises false alarms and projects a sense of market fear through repeating the unnecessary need to potentially use oil emergency stocks”.
This comes amid increased pressure for the group of oil-producing nations to increase output. Earlier this month, OPEC+ members agreed to raise production by 411,000 barrels for the month of July.
The Strait of Hormuz remains open for now. Countries, including Greece and the United Kingdom, have advised ships to avoid the Gulf of Aden, the body of water between Yemen and Somalia that connects to waterways that are close to Israel, and to log all voyages through the Strait, according to documents first seen by Reuters.
Further escalation on the horizon?
Iran could attack Iraq to reduce the global oil supply to further escalate tensions. In January 2024, Iran attacked Iraq, which it said was in retaliation for armed attacks within its own territory, The New York Times reported.
“We should assume that we’re going to lose both Iranian and Iraqi oil production, which brings us to the point where we could be seeing five to seven million barrels per day taken offline,” Gertken told Al Jazeera.
Gertken believes Iran would do this to provoke the West.
“They have to take out some oil supply, but not attack Saudi Arabia or close the Strait of Hormuz because, of course, that would ensure that the US enters the conflict. They need to target some regional production [where] they can have plausible deniability [and blame] some militant group.”
The mandate that the DoT challenged was a key part of former US President Joe Biden’s plan to address climate change.
The United States Department of Transportation (DoT) has declared that former President Joe Biden’s administration exceeded its authority by assuming a high uptake of electric vehicles in calculating fuel economy rules.
With that declaration on Friday, the DoT paved the way for looser fuel standards and published the “Resetting the Corporate Average Fuel Economy Program” (CAFE) rule. A future separate rule from the administration of President Donald Trump will revise the fuel economy requirements.
“We are making vehicles more affordable and easier to manufacture in the United States. The previous administration illegally used CAFE standards as an electric vehicle mandate,” Transportation Secretary Sean Duffy said in a statement.
The department’s National Highway Traffic Safety Administration (NHTSA), in writing its rule last year under Biden, had “assumed significant numbers of EVs would continue to be produced regardless of the standards set by the agency, in turn increasing the level of standards that could be considered maximum feasible,” it said Friday.
A shift away from Biden policies
In January, Duffy signed an order directing NHTSA to rescind fuel economy standards issued under Biden for the 2022-2031 model years that had aimed to drastically reduce fuel use for cars and trucks.
In a release last year, the DoT, then led by Pete Buttigieg, put in place a required fuel economy to increase by 2 percent for cars made between 2027 and 2031.
“These new fuel economy standards will save our nation billions of dollars, help reduce our dependence on fossil fuels, and make our air cleaner for everyone. Americans will enjoy the benefits of this rule for decades to come,” then NHTSA Deputy Administrator Sophie Shulman said at the time.
In June 2024, the NHTSA said it would hike CAFE requirements to about 50.4 miles per gallon (4.67 litres per 100km) by 2031 from 39.1mpg currently for light-duty vehicles.
The agency last year said the rule for passenger cars and trucks would reduce gasoline consumption by 64 billion gallons and cut emissions by 659 million metric tons, cutting fuel costs with net benefits estimated at $35.2bn.
Late on Thursday, Senate Republicans proposed eliminating fines for failures to meet CAFE rules as part of a wide-ranging tax bill, the latest move aimed at making it easier for automakers to build gas-powered vehicles.
Last year, Chrysler-parent Stellantis paid $190.7m in civil penalties for failing to meet US fuel economy requirements for 2019 and 2020 after paying nearly $400m for penalties from 2016 through 2019. GM previously paid $128.2m in penalties for 2016 and 2017.
Stellantis said it supported the Senate Republican proposal “to provide relief while DoT develops its proposal to reset the CAFE standards … The standards are out of sync with the current market reality, and immediate relief is necessary to preserve affordability and freedom of choice.”
South Sudan relies on oil for more than 90 percent of its government revenues, and the country depends entirely on Sudan to export the precious resource.
But this month, Sudan’s army-backed government said it was preparing to shut down the facilities that its southern neighbour uses to export its oil, according to an official government letter seen by Al Jazeera.
That decision could collapse South Sudan’s economy and drag it directly into Sudan’s intractable civil war between the army and paramilitary Rapid Support Forces (RSF), experts warned.
The announcement was made on May 9 after the RSF launched suicide drones for six consecutive days at Port Sudan, the army’s wartime capital on the strategic Red Sea coast.
The strikes destroyed a fuel depot and damaged electricity grids, shattering the sense of security in the city, which lies far from the country’s front lines.
Sudan’s army claims the damage now hampers it from exporting South Sudan’s oil.
“The announcement read like a desperate plea [to South Sudan] for help to stop these [RSF] attacks,” said Alan Boswell, an expert on the Horn of Africa with the International Crisis Group.
“But I think doing so overestimates the leverage that South Sudan has … over the RSF,” he added.
South Sudanese President Salva Kiir [Michael Tewelde/AFP]
Predatory economics
Since South Sudan gained independence from Sudan in 2011, the former has relied on the latter to export its oil via Port Sudan.
In return, Sudan has collected fees from Juba as part of their 2005 peace agreement, which ended the 22-year north-south civil war and ultimately led to the secession of South Sudan from Sudan.
When Sudan erupted into another civil war between the army and RSF in 2023, the former continued collecting the fees from Juba.
“[Sudan and South Sudan] are tied at the hip financially due to the oil export infrastructure,” Boswell told Al Jazeera.
Local media have recently reported that high-level officials from South Sudan and Sudan are engaged in talks to avert a shutdown of oil exports.
Al Jazeera sent written questions to Port Sudan’s energy and petroleum minister, Mohieddein Naiem Mohamed, asking if the army is negotiating higher rent fees from South Sudan before resuming oil exports, which some experts suspected to be a likely scenario.
Naiem Mohamed did not respond before publication.
According to the International Crisis Group, Juba also pays off the RSF to not damage oil pipelines that run through territory under its control.
In addition, South Sudan has allowed the RSF to operate in villages along the Sudan-South Sudan border.
The RSF has increased its presence along the sprawling, porous border after forming a strategic alliance with the Sudan People’s Liberation Movement – North (SPLM-N) in February.
The SPLM-N fought alongside secessionist forces against Sudan’s army. It controls swaths of territory in Sudan’s South Kordofan and Blue Nile regions and has historically close ties with Juba.
South Sudan’s relationship with the SPLM-N and RSF has increasingly frustrated Sudan’s army, said Edmund Yakani, a South Sudanese civil society leader and commentator.
“[Sudan’s army] is suspicious that Juba is helping RSF in its military capability and political space to manoeuvre its struggle against Sudan’s army,” Yakani told Al Jazeera.
House of cards
According to a report by the International Crisis Group from 2021, about 60 percent of South Sudan’s oil profits go to the multinational companies producing the oil.
The report explained that most of the remaining 40 percent goes to paying off outstanding loans and to South Sudan’s ruling elites in the bloated security sector and bureaucracy.
South Sudan’s president, Salva Kiir, will likely not be able to keep his patronage network together without a quick resumption in oil revenue.
His fragile government – a coalition of longtime loyalists and coopted opponents – could collapse like a house of cards, experts warned.
Al Jazeera emailed written questions to South Sudan’s Ministry of Foreign Affairs and International Cooperation to ask if the country has any contingency plan in case oil exports stop indefinitely. The ministry did not respond before publication.
Experts warned that South Sudan has no alternative to oil.
Soldiers relax at their outpost near Nzara, South Sudan, on February 15, 2025 [File: Brian Inganga/AP]
Security personnel and civil servants are already owed months of back pay, and they may turn against Kiir – and each other – if they have no incentive to uphold the fragile peace agreement that ended South Sudan’s own five-year civil war in 2018.
“Kiir is on extremely fragile footing, and there is no backup plan for when the oil runs out,” said Matthew Benson, a scholar on Sudan and South Sudan at the London School of Economics.
A halt in oil revenue would also drive up inflation, exacerbating the daily struggles of millions of civilians.
The World Food Programme estimated that about 60 percent of the population is experiencing acute food shortages while the World Bank found that nearly 80 percent live below the poverty line.
The hardship and pervasive corruption have given way to a predatory economy in which armed groups erect checkpoints to shake down civilians for bribes and taxes.
Civilians will likely be unable to cough up any more money if the oil revenue dries up.
“I’m not sure people can be squeezed more than they already are,” Benson said.
Proxy war?
Some commentators and activists also fear that Sudan’s army is deliberately turning off the oil to force South Sudan to cut off all contact with the RSF and SPLM-N.
This speculation is fuelling some resentment among civilians in South Sudan, according to Yakani.
Meanwhile, some supporters of Sudan’s army argued that South Sudan should not benefit from oil as long as it provides any degree of support to the RSF, which they view as a militia waging a rebellion against the state.
“What Port Sudan [the army] wants is for Juba to absolutely distance itself from aiding the RSF in any way, and that is the complication that the government of [Kiir] is in now,” Yakani told Al Jazeera.
“The majority of citizens of South Sudan – including myself – believe that South Sudan is becoming a land of proxy wars for Sudan’s warring parties and their [regional] allies,” he added.
Sudan’s army also believes that South Sudan’s government is relying increasingly on the RSF’s regional backers to buttress its own security.
Sudan’s army leaders were particularly spooked when Uganda, which it views as supporting the RSF, deployed troops to prop up Kiir in March, according to Boswell.
In addition, Sudan’s army has repeatedly accused the United Arab Emirates of arming the RSF.
“The UAE has already made absolutely clear that it is not providing any support or supplies to either of two belligerent warring parties in Sudan,” the UAE’s Ministry of Foreign Affairs previously told Al Jazeera in an email.
Despite tensions between Sudan’s army and the UAE, analysts said Juba may request a large loan from the UAE to keep its patronage intact if Sudan’s army does not promptly resume oil exports.
“[Sudan’s army] has been worrying and watching closely over whether the UAE might loan South Sudan a significant amount of money,” Boswell said.
“I think a massive UAE loan to South Sudan would be … a red line for Sudan’s army”, he added.
Estonia redirects maritime traffic to prevent future incidents after Russia’s detention of the Green Admire oil tanker.
Russia has detained a Greek oil tanker sailing under the Liberian flag as it left the Estonian port of Sillamae on a previously agreed route through Russian waters, the Estonian Ministry of Foreign Affairs says.
In a statement published on Sunday, the ministry added that the vessel, the Green Admire, was undertaking a navigational route established in a deal between Russia, Estonia and Finland.
The Baltic nation will redirect traffic to and from Sillamea exclusively through Estonian waters to prevent similar incidents in the future, it added.
“Today’s incident shows that Russia continues to behave unpredictably,” Foreign Minister Margus Tsahkna said. “I have also informed our allies of the event,” he said, referring to other NATO members.
Estonian Public Broadcasting (EPB), citing the Transport Administration, reported that the Greek tanker was carrying a cargo of shale oil destined for Rotterdam in the Netherlands. It added that such incidents had never occurred before.
Vessels leaving Sillamae usually move through Russian waters to avoid Estonia’s shallows, which can be dangerous for larger tankers, the EPB said.
The incident took place after the Estonian navy on Thursday tried to stop an unflagged tanker that was said to be part of a Russian “shadow fleet” of vessels sailing through Estonian waters. Russia responded by sending a fighter jet to escort the tanker, violating Estonia’s airspace.
The “shadow fleet” is meant to help Moscow maintain its crude oil exports to avoid Western sanctions imposed after its invasion of Ukraine.
Brussels is drawing up plans to use trade tariffs and capital controls to maintain financial pressure on Russia, even if Hungary decides to use its veto to block an extension of the European Union’s sanctions regime, which lapses in July of this year.
The European Commission has told ministers that a large part of the EU’s sanctions, which included freezing 200 billion euros ($224bn) of Russian assets, could be adapted to a new legal framework to bypass Budapest’s veto, according to the United Kingdom’s Financial Times newspaper.
Viktor Orban, Hungary’s prime minister, has repeatedly held up EU boycotts on Moscow as the central European country gets 85 percent of its natural gas from Russia. Orban’s nationalist government is also one of the most friendly to Moscow in all of Europe.
In any event, the EU’s recent proposals have emerged as Moscow and Kyiv hold their first direct peace talks since Russia’s full-scale invasion of Ukraine in February 2022.
Ukrainian and Russian representatives are convening today in Istanbul, Turkiye. However, Vladimir Putin will not travel to Istanbul for face-to-face talks with Volodymyr Zelenskyy.
Last weekend, European leaders held talks in Ukraine to put pressure on Russia to agree to a 30-day ceasefire in the run-up to the Istanbul talks. Ukraine agreed to it. Russia did not.
What sanctions does the EU currently have in place against Russia?
The EU adopted its 17th sanctions package against Moscow, designed to stifle Russia’s economy and force President Vladimir Putin to end the war in Ukraine, on Wednesday. This package has been signed off by Budapest and will be formally ratified by the European Commission next week.
Brussels has progressively expanded sanctions against Moscow since 2022, introducing import bans on Russian oil, a price cap on Russian fuel and the freezing of Russian central bank assets held in European financial institutions.
Vast swaths of Russia’s economy – from media organisations to aviation and telecommunications – are now under EU restrictions, in addition to trade bans and measures targeting oligarchs and politicians.
Under the 17th package, some 200 “shadow fleet” tankers have been sanctioned. These are ships with opaque ownership and no Western ties in terms of finance or insurance, allowing them to bypass financial sanctions.
The latest sanctions will also target Chinese and Turkish entities that the EU says are helping Russia to evade embargoes. New restrictions will be imposed on 30 companies involved in the trade of dual-use goods – products with potential military applications.
“Russia has found ways to circumvent the blockage imposed by Europe and the United States, so closing the tap would grab Russia by the throat,” France’s foreign minister, Jean-Noel Barrot, told BFM TV.
How effective are sanctions?
Alongside military support for Kyiv, sanctions have been the EU’s main response to Russia’s war on Ukraine. But sanctions have so far failed to stop the war. What’s more, due to high oil prices and elevated military spending, Russia’s economy has outperformed expectations since the start of 2022.
Barrot acknowledged on Wednesday that the impact of sanctions has been insufficient. “We will need to go further because the sanctions so far have not dissuaded Vladimir Putin from continuing his war of aggression … we must prepare to expand devastating sanctions that could suffocate, once and for all, Russia’s economy,” said Barrot.
What new measures are being proposed?
While the 17th round of sanctions was only agreed on Wednesday, EU ministers are already considering what more might be done to undermine Putin’s political clout if the war in Ukraine persists.
Capital controls, which would be aimed at restricting money flowing in and out of Russia, and trade measures such as tariffs, are two options that have been mentioned by the European Commission in recent weeks. Capital controls can take a variety of forms, including restrictions on foreign investment, limiting currency exchange or imposing taxes on the movement of capital.
The commission also aims to share proposals next month that would allow Brussels to implement a ban on new Russian gas spot market contracts – deals for immediate delivery and payment – with European companies in 2025, and a total phase-out by 2027.
Despite oil export restrictions, Russia still earns billions of euros from natural gas sales into the EU through liquefied natural gas (LNG) and TurkStream (a pipeline connecting Russia to southeastern Europe via the Black Sea). Banning spot market contracts would lower Moscow’s revenue from these sources.
Brussels may also propose tariffs on enriched uranium as part of its effort to cut EU reliance on Russian fuels.
According to The Financial Times, the EU insists that these measures would not amount to sanctions and therefore would not need the unanimous backing of all 27 EU countries, which is normally required to extend sanctions.
“I think the EU cooked up these potential punishments to try and get Russia to agree to the 30-day ceasefire … it was the stick they were brandishing,” said an analyst familiar with the matter who asked not to be named.
Will the US impose more sanctions?
It may. On May 1, Senator Lindsey Graham, a South Carolina Republican, said he had the commitment of 72 colleagues for a bill that would enact “bone-crushing” sanctions on Russia.
Graham, a close ally of President Donald Trump, is spearheading a draft bill that seeks to impose a 500 percent tariff on imports from countries that buy Russian oil and fossil fuels.
Trump himself, who seemingly welcomes the possibility of a rapprochement with Russia, said in March that he was “considering” imposing sanctions and tariffs on Russia until a peace agreement is reached with Ukraine.
Could such measures force Putin to the negotiating table?
“Most Russian people want life to return to normal and business owners are getting tired of war-related costs,” the anonymous analyst told Al Jazeera. “There is a growing sense of unease.”
She said she doubted whether the EU’s touted measures would bring Putin any closer to signing a peace agreement, however. “Only because sanctions haven’t been able to do that,” she said, “and there’s already a maze of them.”
According to Castellum.AI, a global risk platform, Russia has been slapped with 21,692 sanctions since the start of the war – the majority of them against individuals.
“On past performance, it’s hard to see how even more sanctions and additional punishments will stop the fighting,” the analyst said.
She estimated a 60 percent chance that Russia and Ukraine would still be at war by the end of this year.
