MICHEL MARTIN, HOST:
Now we want to talk about another potentially serious economic challenge caused by Russia's invasion of Ukraine - potential disruptions to global energy supplies. But today, natural gas is still flowing from Russia into Europe, and Russian oil is still being sold around the world. NPR's Camila Domonoske joins us to talk about why and what it means for a big meeting of oil-exporting nations that's coming up this week. Camila, welcome. Thanks for joining us.
CAMILA DOMONOSKE, BYLINE: Thanks for having me.
MARTIN: So energy prices were already high before the Russian invasion. Have they gotten worse since?
DOMONOSKE: Yeah. Oil prices spiked initially. They went above $100 a barrel very quickly for the first time since 2014, then they calmed back down. They settled at about $98 on Friday. Trading paused for the weekend, and it's just starting again in some parts of the world. And I have to say, the only word for this moment on these markets is uncertainty.
The risks are highest for Europe. Like the previous guest just mentioned, Europe really relies on Russia for a good chunk of natural gas supplies. That's used for heating, cooking and electricity. If that's disrupted, Europe could be in a really tough spot. Here in the U.S., the biggest impact that we're watching for is on gasoline prices, which are already at multiyear highs.
MARTIN: So even though oil prices are relatively high, it looks as though the worst fears for energy markets have not played out, at least so far. Why is that?
DOMONOSKE: The biggest reason is, again, oil and gas. It's still moving out of Russia. These sanctions, including some pretty intense sanctions, are not directly hitting oil and gas exports. And that's intentional. Daleep Singh is an economic adviser for the White House, and at a briefing this week, he pointed out that Russia's energy production is globally significant.
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DALEEP SINGH: That's not to say that we have a dependence on Russia. Russia depends on those revenues just as much as the world needs its energy. But we're not going to do anything which causes an unintended disruption to the flow of energy, as the global economic recovery is still underway.
DOMONOSKE: There is a debate over whether this is the right approach. These direct energy sanctions would hurt Russia more than most other sanctions would, but the White House is clearly wary of how much it would hurt the U.S. and the rest of the world, too. So, again, back to the uncertainty of the moment - which of these wins out? Today, the White House said that these more damaging direct sanctions on energy are still on the table.
MARTIN: So what does this mean for the meeting this week of OPEC? The - that's the cartel of oil-exporting countries.
DOMONOSKE: Yeah. Well, the U.S. is very interested in getting the cartel to boost production to bring prices down. President Biden actually tried to persuade them to do this last year as prices were rising. But this cartel, which is known as OPEC Plus - it's a bunch of major oil-producing countries that coordinate their production. And the two key players are Saudi Arabia and Russia, which complicates things, right? And OPEC Plus has already pretty firmly said no to appeals to increase production. They're boosting it very gradually to keep prices high, which they seem to be pretty happy with.
MARTIN: So when it comes to energy markets, what else are you going to be looking at?
DOMONOSKE: Well, like everyone else, what happens with the war, which is very unpredictable, and what happens with the sanctions. Then there's the question of what U.S. oil companies do. The U.S. is actually the world's No. 1 oil producer. Are high prices going to motivate these companies to boost production? And last but not least, there's the possibility of a new nuclear deal with Iran. Iran's a major oil producer that's been under U.S. sanctions. If there's a breakthrough and all that oil comes back on markets, prices could come down.
MARTIN: That was NPR's Camila Domonoske. Camila, thank you so much.
DOMONOSKE: Thank you.
(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.
