US President Joe Biden announced on March 8 that his country was banning imports of Russian oil and gas, as well as coal. This comes as the US tightens its sanctions against Russia in response to Moscow’s invasion of Ukraine.
In a statement, the White House described the move as “a significant action with widespread bipartisan support that will further deprive President Putin of the economic resources he uses to continue his needless war of choice”. The US made the decision in consultation with global allies, as well as members of Congress from both parties, the statement continued.
According to the US Energy Information Administration (EIA), US imports of Russian crude and refined products averaged roughly 672,000 barrels per day (bpd), or 8% of total liquid fuel imports, over the course of 2021. The US is not as exposed to Russian oil and gas as European countries, but nonetheless, Biden’s decision is expected to have far-reaching impacts, including putting more upward pressure on domestic gasoline prices.
Under the March 8 executive order, Biden will also ban new US investment in Russia’s energy sector and will prohibit US citizens from financing or enabling foreign companies that are investing into energy production in Russia.
The ban follows days of debate – domestically and internationally – over the merits of a potential embargo on Russian crude. Countries including Germany have resisted a full international embargo on fears over the impact such a move would have in Europe, which is much more heavily dependent on Russian oil.
“We’re moving forward this ban understanding that many of our European allies and partners may not be in a position to join us,” Biden stated. “But we’re working closely with Europe and our partners to develop a long-term strategy to reduce their dependence on Russian energy as well.”
Indeed, the European Union unveiled a plan on the same day to reduce imports of Russian gas by two-thirds within a year. And the UK, which left the EU in 2020, said it would phase out oil and oil product imports from Russia by the end of 2022, and would consider doing the same with gas.
Moscow is retaliating against the latest moves. On the evening of March 8, Putin issued a decree banning exports of certain commodities and raw materials until the end of the year. The details were initially unknown, with the Russian cabinet given two days to draw up a list of commodities and countries subject to the ban.
Russian Deputy Prime Minister Alexander Novak had warned a day earlier that retaliatory measures could include cutting gas supplies to Europe via the Nord Stream 1 pipeline. Novak said the country has other options for selling its oil if the US and EU proceeded to ban Russian imports, warning that oil prices could rise to $300 per barrel or more because of such bans.
The Brent crude benchmark was trading at around $127 per barrel as of March 9 – the highest level since 2012 – having briefly spiked to $139 per barrel on March 7.