US President Joe Biden announced a ban on Russian oil and other energy imports on Tuesday in retaliation for the Ukraine invasion, a move acknowledged would drive up U.S. energy prices.
“We’re banning all imports of Russian oil and gas energy,” Biden told reporters at the White House. “That means Russian oil will no longer be acceptable in U.S. ports and the American people will deal another powerful blow to (Russian President Vladimir) Putin’s war machine.”
Oil prices jumped on the news, with Benchmark Brent crude LCOc1 for May climbing by 5.4% to $129.91 a barrel by 1345 GMT.
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Russian ships 7 million to 8 million barrels per day of crude and fuel to global markets.
The United States imports very little oil from Russia, yet the ban is “one more source of supply loss,” said Matt Smith, lead oil analyst at Kpler.
“It’s just one more escalation in a series of events that have pushed crude and product prices higher,” Smith added.
The import bans could send global oil prices up to $200 a barrel, analysts at Oslo-based consultancy Rystad Energy said. Before the U.S. ban was announced, Goldman Sachs had raised its Brent forecast for 2022 to $135 from $98 and its 2023 outlook to $115 a barrel from $105, saying the world economy could face the “largest energy supply shocks ever” because of Russia’s key role.
Biden has been working with allies in Europe, who are far more dependent on Russian oil, to isolate Russia’s energy-heavy economy and Putin. Britain announced shortly before Biden’s remarks that it would phase out the import of Russian oil and oil products by the end of 2022.
Biden said sanctions imposed by the United States and its allies had already caused the Russian economy to “crater”. He said the latest moves had been made in close consultation with allies and partners around the world.
The United States imported more than 20.4 million barrels of crude and refined products a month on average from Russia in 2021, about 8% of U.S. liquid fuel imports, according to the Energy Information Administration, and the ban is expected to send already high gasoline prices and inflation soaring. The United States also imports a negligible amount of coal from Russia.
Biden predicted prices would rise further as a result of “Putin’s war,” but pledged to do all he could to minimize the impact on the American people. He also warned U.S. gas companies against exploiting the situation to engage in profiteering or price gouging.
U.S. Senator Chris Coons said the administration was coordinating with European allies “and making sure that we’ve done the groundwork to understand how to effectively implement a ban on Russian energy.”
“We are going to see increased gas prices here in the United States. In Europe, they will see dramatic increases in prices. That’s the cost of standing up for freedom and standing alongside the Ukrainian people, but it’s going to cost us,” Coons told CNN.
The White House had been coordinating with U.S. congressional leaders working on fast-tracking bipartisan legislation to ban Russian imports, but the ban of Russian imports would make any such bill moot.
Republican lawmakers took to social media to welcome the decision, while criticizing Biden’s green energy policies, and calling for the administration to support more oil and gas production at home.
U.S. Representative Susan Wild said Americans need to realize the larger sacrifice needed. “Obviously nobody wants to pay more for gas,” Wild, a Democrat on the House of Representatives Foreign Affairs Committee, said on MSNBC.
In announcing that it is phasing out imports of Russian oil and oil products by the end of 2022, Britain said it is giving the market and businesses more than enough time to find alternatives to the imports, which make up 8% of demand.
“The government will also work with companies through a new Taskforce on Oil to support them to make use of this period in finding alternative supplies,” British Business and Energy Secretary Kwasi Kwarteng said. (Reuters)
