WASHINGTON: President Joe Biden announced that the U.S. will ban all Russian oil imports. Toughening the toll on Russia’s economy in retaliation for its invasion of Ukraine.
The action follows pleas by Ukrainian President Volodymyr Zelenskyy to U.S. and Western officials to cut off the imports. Energy exports have kept a steady stream of cash flowing to Russia despite the severe restrictions on its financial sector.
“We will not be part of subsidizing Putin’s war,” Biden declared, calling the new action a “powerful blow” against Russia’s ability to fund the ongoing offensive.
He warned that Americans will see rising prices, saying, “Defending freedom is going to cost.”
Biden said the U.S. was acting in close consultation with European allies. Who is more dependent on Russian energy supplies and who he acknowledged. The European Union this week will commit to phasing out its reliance on Russia for energy needs as soon as possible. But filling the void without crippling EU economies will likely take some time. The U.K., which is no longer part of the EU, announced Tuesday that oil and oil products from Russia will be phased out by the end of the year.
Unlike the U.S., which is a major oil and gas producer, Europe relies on imports for 90% of its gas and 97% of its oil products. Russia supplies 40% of Europe’s gas and a quarter of its oil. The U.S. does not import Russian natural gas.
Gas prices have been rising for weeks due to the conflict and in anticipation of potential sanctions on the Russian energy sector. The average price for a gallon of gasoline in the U.S. hit a record $4.17 Tuesday, rising by 10 cents in one day, and up 55 cents since last week, according to auto club AAA.
Even before the U.S. ban, many Western energy companies including ExxonMobil and BP moved to cut ties with Russia and limit imports. Shell, which purchased a shipment of Russian oil this weekend, apologized for the move on Tuesday. Amid international criticism and pledged to halt further purchases of Russian energy supplies. Preliminary data from the U.S. Energy Department shows imports of Russian crude dropped to zero in the last week in February.
In 2021, the U.S. imported roughly 245 million barrels of crude oil and petroleum products from Russia — a one-year increase of 24%, according to the U.S. Energy Information Administration. The White House said the ban on new purchases was effective immediately. But the administration was allowing a 45-day “wind-down” for continued delivery under existing contracts.
Before the invasion, Russian oil and gas made up more than a third of government revenues. Global energy prices have surged after the invasion and have continued to rise despite coordinated releases of strategic reserves. Making Russian exports even more lucrative.
As a consequence of Russia’s invasion of Ukraine, the U.S. and international partners have sanctioned Russia’s largest banks, its central bank, and finance ministry. And moved to block certain financial institutions from the SWIFT messaging system for international payments.
While Russian oil makes up a small amount of overall U.S. energy imports. The U.S. could replace Russian crude with imports from other oil-rich nations, but that could prove politically problematic.