Removal of SWIFT could drive up global oil prices

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As Western countries attempt to block some Russian banks’ access to the SWIFT international payments system, analysts say the exclusion could raise already high gas and energy prices.

SWIFT or the Society for Worldwide Interbank Financial Telecommunication handles $5 trillion in wire transfers per day.

Over 11,000 financial institutions worldwide use the service.

Businesses that do not have access may have difficulty settling their trade accounts.

A senior Biden administration official said it was necessary to ensure the ruling against Russian banks did not affect energy prices or countries transacting through the natural resource-related system.

Europe depends on Russia for almost 30% of its oil needs and around 34% of its natural gas needs.

Analysts say that if Russia retaliates by cutting Europe’s crude oil or natural gas supplies, it could drive prices up even further.

But crude and gas exports are a key source of revenue for Russia, so cutting resource sales would be a blow to its economy.

Analysts say that if the United States and its allies decide not to scrap the banks used for energy settlements, the impacts on Russia will eventually be limited.

Russia could also try to mitigate the economic impact by redirecting some of its energy exports to China.

Experts add that if the sanctions end up targeting all Russian banks, including those serving the energy sector, it could send oil and gas prices skyrocketing. They say such an outcome would likely weigh on global GDP.

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