Sanctions against the energy industry of Russia in response to reported plans to invade Ukraine will be a last resort, CNN has reported, citing White House officials.
"We're trying to do it in such a way where it is a menu of options. We will not do everything on that menu all at once," one of the sources, who remained unnamed, said. "The energy section of it is the more extreme option if it becomes necessary. I do not see that as being in the first tranche. You always want to keep things in your back pocket."
According to officials from the federal government, energy sanctions could lead to higher international oil and gas prices, which would in turn push up prices at the pump for American drivers.
Given the sensitivity of this issue, CNN goes on to report, the Biden administration would be reluctant to target Russia's energy industry.
The President's ratings have been on the decline recently, with higher gasoline prices seen as one of the main culprits. Biden made a series of efforts to lower these, first by calling on OPEC to boost production, repeatedly, and then by announcing the release of 50 million barrels of crude from the strategic petroleum reserve.
"It will be very difficult to impose severe economic harm on Russia without affecting energy markets," said Edward Fishman, senior fellow at the Atlantic Council and former White House official. "Oil and gas account for 40 percent of Russia's federal budget. The United States and Europe can take steps in advance to contain spillovers, but if they plan to impose serious economic sanctions on Russia, they cannot avoid the energy sector entirely."
Besides the energy industry of Russia as a whole, sanction ideas include targeted action against the Nord Stream 2, which has been a bother for Washington from even before the latest Ukrainian flare-up. Earlier this week, U.S. officials told Congress that the government has an understanding with Germany to halt the pipeline project in case of an invasion.
By Charles Kennedy for Oilprice.com
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