WHEN it comes to the Ukraine crisis and energy, we are less in a war of attrition than one of asymptotes.

       Russian President Vladimir Putin has recognised two breakaway statelets in eastern Ukraine. Not to downplay the importance or drama of this move, but like so many before it, it is another calibrated step toward the edge.

       In response, German Chancellor Olaf Scholz suspended approval of the Nord Stream 2 gas pipeline from Russia – but held back from killing it outright. Broader Western sanctions came Tuesday, though not the most severe ones, because Putin’s latest move doesn’t yet meet the vague definition of a full invasion.

       If you want a simple reason for this incrementalism on the part of Washington and various EU capitals, it’s that Russia has energy that the West needs. This extends beyond Europe’s dependence on natural gas flows to the United States itself.

       Even though the US has become a small net exporter of oil, it still relies on foreign flows. The US imported almost 8.3 million barrels a day of crude oil and refined products in the week ending Feb 11.

       While others obsess over energy independence, oil refiners choose the most economic barrels to use, not just ones with stars and stripes on them. And roughly one in 12 of those imported barrels comes from Russia.

       The big uptick in those imports has resulted from another international spat – with Venezuela. Oil imports from Venezuela, dwindling for years as that country’s oil sector collapsed, were zeroed out altogether in 2019 when the US imposed sanctions meant to put pressure on President Nicolas Maduro to step down.

       Venezuela produces heavy oil that’s suited to the sophisticated refineries dotting the US Gulf Coast. While the bulk of Russian oil imported to the US is refined already, we’re not talking high-quality gasoline here. Rather, it’s a gooey, intermediate product that can be refined further, taking the place of those Venezuelan barrels.

       In theory, if the US were to impose sanctions on Russian oil imports – or if Moscow were to unilaterally stop them – those barrels would end up somewhere else, freeing up some other source.

       Indeed, that’s what the big US refiner Valero Energy Corp pointed out on its last earnings call when asked about about its exposure to the Ukraine crisis. Chief commercial officer Gary Simmons said that whichever refineries take Russia’s barrels, “they’ll kick out feedstocks and make it available for us to run.”

       In practice, though, the sudden disruption of roughly 700,000 barrels a day would come with some friction. And with oil closing in on US$100 (RM418.53) a barrel, more friction is hardly needed.

       Ordinarily, Saudi Arabia and the United Arab Emirates might be expected to supply similarly heavy barrels. But with relations between Riyadh and Washington cool and Russia a key member of Opec+, that can’t be taken for granted.

       The upshot is that President Joe Biden, like his European allies, has reason to tread carefully in targeting the one industry that Russia actually cares about: energy.

       As of December, 3.8% of Americans’ disposable personal income was going to fuel and utility bills. That’s not nearly as much as during the 2008 or late 1970s energy crises. But it’s back up to where it was during the 2018 mid-term elections, and heading in the wrong direction.

       There’s a reason Biden warned in a recent speech that “defending democracy and liberty is never without cost,” and that reason happens on Nov 8.

       It may be no coincidence that efforts to reach some sort of deal with Iran have picked up speed, since this would entail lifting US sanctions and putting perhaps a million barrels a day from that country back onto the market this year.

       Also notable is the recent call by Venezuela’s National Assembly head Juan Guaido for the US to ease sanctions on his country to help bring Maduro to the negotiating table.

       The pump price isn’t necessarily the only or even most important factor in such manoeuvrings. US presidents are apt to be blamed for expensive fuel even if their options for addressing it are few. Foreign policy is one of them. — Bloomberg

       Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. The views expressed here are the writer’s own.