EU signs new US gas deal in wake of Russian invasion of Ukraine

March 28, 2022

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The European Union has signed a new deal with the United States that will see the EU receive an extra 15 billion cubic metres of liquefied natural gas by the end of the year, as it aims to reduce its reliance on Russian energy.

Following Russia’s invasion of Ukraine, the EU has been quick to reduce its ties with the country. Alongside a raft of sanctions on Russian businesses and individuals, the alliance has also been looking at ways it can reduce its dealings with Russia.

The extra 15 billion cubic metres is in addition to the 22 billion the EU already receives from the US, and equates to about 10% of the total supply received from Russia. 

Approximately 40% of the EU’s total gas needs are supplied by Russia. The combined 37 billion cubic metres from the US will equate to around 24% of this total.

UK Chancellor Rishi Sunak unveiled his Spring Budget last week amid the growing cost of living crisis. It featured modest cuts in fuel duty tax and national insurance contributions alongside Mr Sunak pre-announcing a reduction in the basic income tax rate in 2024.

In the United States, new data showed that some aspects of the economy remained resilient in the face of the turbulence experienced as a result of the Russian invasion. Durable goods orders fell 2.2% in February, the first decline in five months and much more than the expected fall of around 0.5%, but IHS Markit’s gauge of manufacturing activity rose much more than expected in March and hit its highest level since September 2020 - whilst its services gauge indicated the most activity since July 2021. Weekly jobless claims fell much more than expected and hit levels last seen in September 1969.

Amid growing pressure on Japanese Prime Minister Fumio Kishida to act to cushion the impact of rising fuel and commodity prices on households and firms, the Japanese government is set to announce an additional package of measures to boost the economy. Tokyo’s core consumer price index, a leading indicator of the national average, rose 0.8% in March from a year earlier.

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