What the US ban on Russian oil and gas means for Americans
With the attack onThe US is creating the worst humanitarian crisis on European soil since World War II, targeting the heart of Russia’s economy: its energy sector. President Biden announced on Tuesday a over that of the country a direct hit on Russian President Vladimir Putin’s main source of income, while Russian forces continue their strikes on Ukrainian cities.
The announcement comes as Europe’s worst refugee crisis has ever deepened, with more than 2 million people fleeing Ukraine to neighboring countries in recent days, according to the United Nations.
“Today I announce that the United States is attacking the main artery of the Russian economy,” the president said. “We ban all imports of Russian oil and gas energy. This means that Russian oil will no longer be accepted in US ports and the American people will deal another mighty blow to Putin’s war machine.”
Oleg Ustenko, an economic adviser to Ukraine’s president, penned an op-ed last weekend urging the world to cut off what he denounced as Russia’s “blood oil,” which supplies Moscow with nearly $1 billion a day and which he says that it will fund the war in Ukraine. “Don’t buy anything from Russia,” he wrote.
With US gas pricesAs oil prices soar, here’s what the ban on Russian oil imports means for Americans at the pump and elsewhere.
This is what the US ban looks like
The US is far less dependent on Russian oil than Europe. Last year, about 8% of U.S. oil imports came from Russia, while almost no Russian oil entered the U.S. in January, said Troy Vincent, senior market analyst at DTN, a commodity research firm.
Vincent and other analysts said ahead of the president’s announcement on Tuesday that the relatively small volume of Russian oil in America makes it more likely for the US itself to punish Russian energy and impose oil-related sanctions than the European Union, which is far more dependent of Russian oil and gas, could join later.
US sanctions could have taken two forms, Vincent said before the ban was announced by the White House. The stricter option would be for the US to sanction Russian oil exports — not buying Russian oil and refusing to cooperate with any nation that does, much like the US has tackled sanctions on Iran in recent years.
The softer and more likely option was the imposition of a US embargo on Russian energy. “We will say: ‘Nobody in the US will touch Russian oil, let the EU decide its own fate,'” Vincent said.
Mr Biden said on Tuesday the decision to ban Russian oil and gas, which includes Russian coal, was made in close consultation with allies and partners in Europe, but acknowledged some allies “may not be able to.” to join us”.
Less oil, more expensive petrol
In the short term, the phasing out of Russian oil will drive things forwardeven higher in America, experts predicted.
“We believe that a total ban on Russian energy imports would cause Brent crude and European natural gas prices to rise to $160 [per barrel]said economists from Capital Economics in a research report.
That level would shatter an all-time record of $147 a barrel set in the summer of 2008 and push average US gas prices above $5 a gallon, according to energy analysts and economists.
A Quinnipiac poll released Monday found that an overwhelming majority of Americans support a ban on Russian oil, even if it means higher gas prices. That attitude could change, however, once drivers actually pay a lot more at the pump while inflation eats up other parts of their household budgets.
“We’re hostile to Russia until you start really explaining to the US what the cost to the US is, and then people soften a little bit,” said Clayton Allen, managing director for the United States at Eurasia Group , a politician risk research firm.
“If Biden wants to take really tough action, maybe it’s better to do it sooner while public opinion is on his side,” Allen said.
Gas prices, already a political albatross for President Biden, are clearly weighing on the diplomatic decision, and White House officials have underscored their reluctance to take steps that would push gas prices even higher.
With sanctions, “US energy prices need to go up — that might be a short-term spike, but it’s something they’re obviously worried about,” Allen said. “They haven’t spent as much time as I would have expected trying to domesticate the idea that US consumers may have to shoulder some of the cost of isolating and punishing Russia.”
Wildcards: Iran and Venezuela
To limit the impact of higher prices, the US and international partners are releasing oil from reserves. Historically every time the(SRP) opens, gas prices will relax for two to three weeks, Allen said.
“If you’re worried about gas being $5, an SRP release won’t pull gas back to $3.50, but it will prevent the oil market from seizing up like it did in the 1970s,” he said everyone
The Biden administration is also negotiating Iran’s re-entry into a nuclear control deal that would put Iranian oil back on the world market. Currently, Iran can produce about a fifth of the oil that would leave the market if Russia were to leave, DTN’s Vincent said.
The US is also trying to ease ties with Venezuela, which has been barred from selling oil to the US since the Trump administration.