Russian invasion of Ukraine 'could spark record-breaking gas and petrol prices in UK'

·Political Correspondent, Yahoo News UK
·4-min read
Russian President Vladimir Putin smiles during a meeting with Iranian President in Moscow on January 19, 2022. (Photo by Pavel BEDNYAKOV / SPUTNIK / AFP) (Photo by PAVEL BEDNYAKOV/SPUTNIK/AFP via Getty Images)
Vladimir Putin could weaponise Russia's natural gas resources. (AFP/Getty Images)

A Russian invasion of Ukraine could spark a record increase in energy prices in the UK, ministers have reportedly been warned.

Tensions are escalating between the West and Russia, with the UK government believing there is a significant risk that Russian president Vladimir Putin will launch a full-scale invasion.

Britain has withdrawn some of its embassy staff from the country and warned against non-essential travel. On Monday, NATO announced they were sending planes and ships to the border to bolster the eastern European defence.

According to The Times, senior government officials have warned ministers that gas and petrol costs could spike even higher should Russia "weaponise" gas supplies if the West impose sanctions on Russia over an invasion of Ukraine.

Read more: UK accuses Russia of Ukraine leadership plan

On Monday, Boris Johnson insisted that any Russian action against Ukraine would not be “cost-free".

"The UK is in the lead in creating that package of economic sanctions… helping to stiffen the resistance of our Ukrainian friends with defensive weaponry that we are supplying, making it clear that we stand fully four-square with the people of Ukraine and that we support the sovereign integrity of Ukraine, and we do," he said.

Watch: PM: Russian invasion would be violent and bloody business

“But we also need to get over to Russia that any invasion, any incursion – of any kind, of any dimension – into Ukraine is not going to be a cost-free business… there will be casualties.”

While the UK only gets 1% of its gas from Russia, with the majority coming from the North Sea, up to 40% of the continent get theirs from the state - and there are concerns that rising prices from Russia would have a knock-on effect in the UK.

"Unlike some countries the UK hardly imports any Russian gas,” one official told the newspaper.

“But like all countries we are exposed to rising wholesale prices, which would be a significant issue if Russia further restricted supply.”

Bjanes Schieldrop, chief analyst of Commodities, SEB, said it was inevitable energy prices would increase in the UK.

Read more: Raab says it's ‘extremely unlikely’ troops will be sent to Ukraine in event of Russian invasion

"The energy market is definitely now a global market... it's more or less the same price for all consumers being in Asia and Europe," he told Sky News.

He added: "If we need more LNG [Liquefied Natural Gas] imports in Europe, it is going to drive up the global price - and that goes for the price in the UK as well."

A spokesperson for the prime minister said the UK is "monitoring carefully" the potential impact of price rises on the continent on energy bill costs.

"We are concerned about the increasing global rising energy costs and, beyond getting into speculation about what could happen if Russian aggression increases, it’s certainly something we’re monitoring carefully," they said on Monday.

KYIV, UKRAINE - JANUARY 22: Civilian participants in a Kyiv Territorial Defence unit train on a Saturday in a forest on January 22, 2022 in Kyiv, Ukraine. Across Ukraine thousands of civilians are participating in such groups to receive basic combat training and in time of war would be under direct command of the Ukrainian military. While Ukrainian officials have acknowledged the country has little chance to fend off a full Russian invasion, Russian occupation troops would likely face a deep-rooted, decentralised and prolonged insurgency. Russia has amassed tens of thousands of troops on its border to Ukraine. (Photo by Sean Gallup/Getty Images)
Civilian participants in a Kyiv Territorial Defence unit train on a Saturday in a forest on January 22, 2022 in Kyiv, Ukraine. (Getty Images)

"Obviously, we are not dependent on Russian gas supply - we meet half of our supply from within British territorial waters, with the vast majority of imports coming from suppliers like Norway."

The prospect of energy bills soaring even higher is likely to trigger alarm in government following the growing cost-of-living crisis.

Energy bills are already set to soar by 50% in April when the energy price cap increases, with experts warning 2022 will be the "year of the squeeze" for millions of Brits and potentially "catastrophic" for many.

There are growing reports the government is considering one-off £500 payments to low-income families struggling with rocketing energy bills in the coming months.

Read more: UK pulls some embassy staff out Ukraine in response to ‘growing threat’ from Russia

On Friday, business secretary Kwasi Kwarteng said the government is trying to find a solution for "what is a really, really serious problem”.

“Lots and lots of things have been discussed, and I’m sure that’s one of the things that we’ve been talking about,” he said.

“My officials in the department speak to Treasury officials, and ministers speak to each other all the time.”

Watch: Cost of living: Households facing 'fuel stress' set to triple as energy bills surge, think-tank warns