The United States announced a ban on imports of Russian energy products on Tuesday, without the participation of the allies in Europe.
The ban includes not only Russian oil, but also coal and liquefied natural gas (LNG), Bloomberg’s sources said, speaking on the condition of anonymity.
“Today, I’m announcing the United States is targeting the main artery of Russia’s economy. We’re banning all imports of Russian oil and gas and energy. That means Russian oil will no longer be acceptable at U.S. ports and the American people will deal another powerful blow to Putin’s war machine,” President Biden said in a White House announcement on Tuesday.
The President stressed that while the decision was made in close consultation with its European allies, he understood not every ally would be in a position to join the United States in sanctioning Russia’s energy supplies.
On Monday, reports emerged that the United States was considering banning imports of Russian oil without the participation of its European allies, at least at an initial stage of putting further pressure on Putin’s largest source of revenues. Related: U.S. Shale Cannot Offset Loss Of Russian Crude In The Short Term
The Western allies have refrained so far from imposing sanctions on Russia’s energy exports amid concerns about creating shortages in the oil market. Europe is much more dependent on Russian oil than the United States.
Europe—most notably German Chancellor Olaf Scholz—said on Monday that it was not on board with banning imports of oil and gas from Russia.
“Currently, there is no other way to secure Europe’s supply of energy for heat generation, mobility, power supply, and industry,” Scholz said.
“It is therefore our conscious decision to continue doing business with Russian energy,” the German chancellor said on Monday.
Meanwhile, also on Monday, Democrats and Republicans at Congress reached a bipartisan deal that would pave the way for a ban on the import of energy products from Russia.
Russia warned on Monday that an energy embargo on Moscow would have “catastrophic consequences for the global market,” Russian Deputy Prime Minister Alexander Novak said, adding that if the Western allies cut off Russian oil, prices could jump to $300 a barrel or even more.
The United States, which imports around 500,000 bpd of Russian crude and products, can afford to ban imports from Russia without severe consequences on its industry and economy, unlike Europe.
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By Tsvetana Paraskova for Oilprice.com
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Russia exports some 600,000 barrels a day (b/d) of crude oil to the United States. Russia can sell this quantity elsewhere particularly in China.
The United States which imports 9.0 million barrels a day (mbd) is more vulnerable to oil price shocks more than any other major economy. The gasoline price rose today in the US to a record level of $4.0 a gallon fuelling an already rising inflation.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London