Economic sanctions on Russia would hurt, expert says

HOUSTON — The Russian military invasion in the Crimean region of Ukraine could encourage greater exports of U.S. oil and gas, a former State Department official said Monday afternoon at an energy conference in Houston.

“If we don’t see the Russians pulling out, we could see the the idea raised of changing U.S. energy policy to export crude and increase the number of countries that could receive gas exports,” said Richard Haass, now president of the Council on Foreign Relations during the CERAWeek conference.

Russian president Vladimir Putin’s broader strategy in Crimea is still opaque, Haass said, explaining that Russia could be using its presence to negotiate terms with a new Ukrainian government that took office in Kiev last week. But Putin also could plan to stay in Crimea or expand Russian control to the rest of the Ukraine.

Global impact: Oil prices spike on Russia sanctions fears

Each scenario would have consequences for both the U.S. and Europe, which imports a significant amount of oil and gas from Russia, Haass explained.

Countries in Europe are expected to have a range of reactions to Moscow’s demonstration of power, Haass said.

“The idea that you would have Europe and U.S. falling quickly into line is very optimistic,” Haass said, noting that Europe depends heavily on Russia for its natural gas supply.

U.S. and European diplomats may consider using sanctions or a possible suspension of Russia from the G-8 to try to force a retreat, said Nariman Behravesh, the chief economist for IHS.

CERAWeek: Russian energy minister cancels Houston visit amid Ukrainian crisis

And while the strategy or its potential success is unknown, Russia’s economic vulnerability would give such actions a powerful punch.

“Russia stands to lose a lot,” Behravesh said, pointing out that about half of all Russian trade is with Europe. “The good news for Europe and the U.S. is that Russia is much more integrated than ten years ago — we have a lot of leverage.”

Also on FuelFix:

US oil producers rise in ranking of world’s largest