Halliburton Co. in Fort Worth, TexasAs US- and EU-led economic sanctions against Russian energy players crank up, the degree to which Western interests could be collaterally damaged is again being called into question. The EU has shied away from sanctioning Russian gas industry participants because the bloc is so reliant on Russian gas supply, but oil market pressure could also have negative knock-on effects for western governments and companies.

Major oilfield service providers Halliburton and Schlumberger are reportedly feeling sanction pressure and distancing themselves from Russian companies. This appears to be opening the door to domestic Russian service companies that have lost out on contracts to Halliburton and Schlumberger even though they are typically more expensive.

“Halliburton has already left the market and Schlumberger is likely to follow, to be quickly replaced by Russian service companies,” said Rustam Tankayev, lead analyst at the Russian Union of Oil and Gas Producers. – As reported by The Moscow Times

Over the medium to longer term, there is a concern that sanctions could negatively impact Russian oil output – one of the world’s top producers – which could push up prices and damage fragile western economies still struggling to recover from the financial crisis.

“Because of financial sanctions, the big gorillas are going to start cutting their activities,” The Financial Times quoted former BP CEO Tony Hayward as saying in reference to major Russian oil players like Rosneft, LukOil, Surgetneftegas and others that have all recently been sanctioned.

“These fields can continue operating, but expanding drilling could prove to be more challenging in this environment if the project relied on European parts,” Barclays’ Michael Cohen said in the same FT article.