Washington: US President Joe Biden has decided to ban Russian oil imports, toughening the toll on Russia’s economy in retaliation for its invasion of Ukraine, according to international media reports.
The move follows pleas by Ukrainian President Volodymyr Zelenskyy to US and Western officials to cut off the imports, which had been a glaring omission in the massive sanctions put in place on Russia over the invasion.
US President Joe Biden has decided to ban Russian oil imports, toughening the toll on Russia’s economy in retaliation for its invasion of Ukraine: The Associated Press#RussiaUkraineConflict
— ANI (@ANI) March 8, 2022
Energy exports have kept a steady influx of cash flowing to Russia despite otherwise severe restrictions on its financial sector. Biden was set to announce the move as soon as Tuesday, the person said, speaking on condition of anonymity to discuss the matter before his remarks.
The White House said Biden would announce “actions to continue to hold Russia accountable for its unprovoked and unjustified war on Ukraine.” The US will be acting alone, but in close consultation with European allies, who are more dependent on Russian energy supplies.
European nations have said they plan to reduce their reliance on Russia for their energy needs but filling the void without crippling their economies will likely take some time. Natural gas from Russia accounts for one-third of Europe’s consumption of fossil fuel. The US does not import Russian natural gas.
Biden had explained his reluctance to impose energy sanctions at the outset of the conflict two weeks ago, saying that he was trying ‘to limit the pain the American people are feeling at the gas pump.’ Gas prices have been rising for weeks due to the conflict and in anticipation of potential sanctions on the Russian energy sector.
The US national average for a gallon of gasoline soared 45 cents a gallon in the past week and topped USD 4.06 on Monday, according to auto club AAA. The United States generally imports about 100,000 barrels a day from Russia, only about 5 per cent of Russia’s crude oil exports, according to Rystad Energy. Last year, roughly 8 per cent of US imports of oil and petroleum products came from Russia.
Even before the US 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, apologised for the move on Tuesday amid international criticism and pledged to halt further purchases of Russian energy supplies. Preliminary data from the US Energy Department shows imports of Russian crude dropped to zero in the last week in February.
“It’s an important step to show Russia that energy is on the table,” said Max Bergmann, a former State Department official who is now a senior fellow at the Democratic-leaning Center for American Progress.
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 US 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.
But the rules issued by the Treasury Department allow Russian energy transactions to keep going through non-sanctioned banks that are not based in the US in an effort to minimize any disruptions to the global energy markets. Biden specifically highlighted those Russian energy carve-outs as a virtue because they would help to protect US families and businesses from higher prices.
Biden’s actions Tuesday were not expected to affect other nations’ energy payments to Russia. Inflation, at a 40-year peak and fuelled in large part by gas prices, has hurt Biden politically with voters heading into the November elections.
The sanctions created a possible trade-off for the president between his political interests at home and abroad. By invading Ukraine, Russia has potentially fed into the supply chain problems and inflation that have been a crucial weakness for Biden, who now is trying to strike a balance between penalizing Putin and sparing American voters.
While Russian oil makes up a small amount of overall US energy imports, the US could replace Russian crude with imports from other oil-rich nations, but that could prove politically problematic. Key US senators are warning the Biden administration from seeking any oil import deal from the Nicolas Maduro regime in Venezuela.
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