Will US Russian oil ban trigger fuel costs to go even greater?

Whereas the U.S. might substitute the comparatively small quantity of gasoline it receives from Moscow, Europe couldn’t, at the very least not anytime quickly.

NEW YORK — With Russia intensifying its struggle on Ukraine, killing civilians and triggering a mass refugee disaster, President Joe Biden on Tuesday introduced a U.S. ban on imported Russian oil. Critics of Russia have stated that sanctioning its vitality exports could be the very best — maybe solely — option to pressure Moscow to tug again.

A full embargo could be best if it included European allies, that are additionally determined to cease the violence in Ukraine and the hazard Moscow poses to the continent. But it is from clear that every one of Europe would participate in an embargo, although Britain introduced Tuesday that it might section out Russian oil imports by yr’s finish.

In contrast to america, Europe is deeply reliant on vitality it imports from Russia, the world’s second-largest crude oil exporter behind Saudi Arabia. Whereas the U.S. might substitute the comparatively small quantity of gasoline it receives from Moscow, Europe couldn’t, at the very least not anytime quickly.

What’s extra, any curbs on Russian oil exports might ship already skyrocketing oil and gasoline costs ever greater on each continents and additional squeeze shoppers, companies, monetary markets and the world financial system.


Amid rising gasoline costs within the U.S. — the common worth reached a document $4.17 a gallon on Tuesday — the Biden administration has confronted rising strain to impose additional sanctions on Russia, together with a ban on oil imports.

For now, a broad U.S.-European ban seems elusive. On Monday, German Chancellor Olaf Scholz made clear that his nation, Europe’s single-largest client of Russian vitality, has no plans to hitch in any ban. In response, U.S. Deputy Secretary of State Wendy Sherman hinted that the U.S. might act alone or with a smaller group of allies.

“Not each nation has achieved precisely the identical factor,” Sherman stated, “however we now have all reached a threshold that’s essential to impose the extreme prices that we now have all agreed to.”

Even with a ban on Russian oil, the Biden administration and Congress “stay laser-focused on bringing down the upper vitality prices for American households and our companions stemming from Putin’s invasion,” Home Speaker Nancy Pelosi stated.

Pelosi, who has expressed help for a U.S. ban on Russian oil, nonetheless additionally cited Biden’s motion in main U.S. allies to launch 60 million barrels of oil from strategic reserves, together with 30 million barrels from U.S. reserves, to attempt to stabilize world markets.


The affect on Russia would doubtless be minimal. The USA imports a small share of Russia’s oil exports and would not purchase any of its pure fuel.

Final yr, roughly 8% of U.S. imports of oil and petroleum merchandise got here from Russia. Collectively, the imports totaled the equal of 245 million barrels in 2021, which was roughly 672,000 barrels of oil and petroleum merchandise a day. However imports of Russian oil have been declining quickly as consumers shunned the gasoline.

As a result of the quantity of oil the U.S. imports from Russia is modest, Russia might doubtlessly promote that oil elsewhere, maybe in China or India. Nonetheless, it might in all probability need to promote it at a steep low cost, as a result of fewer and fewer consumers are accepting Russian oil.

If Russia had been finally shut off from the worldwide market, rogue nations similar to Iran and Venezuela is likely to be “welcomed again” as sources of oil, stated Claudio Galimberti, senior vp of study at Rystad Power. Such further sources might, in flip, doubtlessly stabilize costs.

A group of Biden administration officers had been in Venezuela over the weekend to debate vitality and different points, White Home press secretary Jen Psaki stated. She stated officers mentioned a spread of points, together with vitality safety.

“By eliminating among the demand, we’re forcing the value of Russian oil down, and that does scale back income to Russia,” stated Kevin E book, managing director at Clearview Power Companions. “In concept, it’s a method of decreasing how a lot Russia earns on each barrel it sells, possibly not by quite a bit, however by some. A very powerful query is whether or not there’s going to be extra strain on the opposite facet of the Atlantic.”


The information of the looming U.S. oil ban despatched gasoline costs to their highest stage ever recorded, with a gallon of standard promoting for a median of $4.17 Tuesday.

A month in the past, oil was promoting for about $90 a barrel. Now, costs are surging round $130 a barrel as consumers shun Russian crude. Refiners had already feared being left with oil they could not resell if sanctions had been imposed.

Shell stated Tuesday that it might cease shopping for Russian oil and pure fuel and shut down its service stations, aviation fuels and different operations there, days after Ukraine’s international minister criticized the vitality big for persevering with to purchase Russian oil.

Power analysts warn that costs might go as excessive to $160 and even $200 a barrel if consumers proceed shunning Russian crude. That development might ship U.S. gasoline costs previous $5 a gallon, a situation that Biden and different political figures are determined to keep away from.


The U.S. oil trade has stated it shares the purpose of decreasing reliance on international vitality sources and is dedicated to working with the Biden administration and Congress. Even with out sanctions, some U.S. refiners have severed contracts with Russian corporations. Imports of Russian crude oil and merchandise have tumbled.

“Our trade has taken vital and significant steps to unwind relationships” with Russia and voluntarily restrict Russian imports, stated Frank Macchiarola, senior vp of the American Petroleum Institute, the oil and fuel trade’s largest lobbying group.

Preliminary information from the U.S. Power Division reveals imports of Russian crude dropped to zero within the final week in February.

The petroleum institute hasn’t taken a proper stance on laws to ban Russian oil imports. But it surely says it might adjust to any restrictions imposed.


A ban on Russian oil and pure fuel could be painful for Europe. Russia supplies about 40% of Europe’s pure fuel for house heating, electrical energy and trade makes use of and a few quarter of Europe’s oil. European officers are in search of methods to cut back their dependence, however it will take time.

Britain’s enterprise secretary, Kwasi Kwarteng, stated his nation will use the remainder of the yr to section out its imports of oil and petroleum merchandise to “give the market, companies and provide chains greater than sufficient time to interchange Russian imports,” which account for 8% of U.Ok. demand.

Germany’s financial system minister, Robert Habeck, on Tuesday defended the European resolution to this point to exempt Russian vitality from sanctions.

“The sanctions have been chosen intentionally in order that they affect the Russian financial system and the Putin regime significantly, however additionally they have been chosen intentionally in order that we as an financial system and a nation can maintain them up for a very long time,” Habeck stated. “In poor health-considered habits might result in precisely the alternative.”

“We’ve got maneuvered ourselves into an ever-greater dependency on fossil vitality imports from Russia within the final 20 years,” Habeck stated. “That isn’t an excellent state of affairs.”

Russian Deputy Prime Minister Alexander Novak underlined that urgency, saying Russia would have “each proper” to halt pure fuel shipments to Europe by the Nord Stream 1 pipeline in retaliation for Germany halting the parallel Nord Stream 2 pipeline, which was not but working. He added that “we now have not taken this resolution” and that “nobody would profit from this.” It was a change from earlier Russian assurances that that they had no intention of slicing off fuel to Europe.

Oil is simpler to interchange than pure fuel. Different nations might improve manufacturing of oil and ship it to Europe. However a lot oil must get replaced, and this is able to drive up costs much more as a result of the oil would doubtless need to journey farther.

Changing the pure fuel that Russia supplies to Europe is probably going unimaginable within the quick time period. A lot of the pure fuel Russia supplies to Europe travels by pipelines. To switch it, Europe would largely import liquefied pure fuel, often known as LNG. The continent would not have sufficient pipelines to distribute fuel from coastal import amenities to farther reaches of the continent.

In January, two-thirds of American LNG exports went to Europe. Some ships crammed with LNG had been heading to Asia however circled to go to Europe as a result of consumers there supplied to pay greater costs, in response to S&P International Platts.

Whereas U.S. oil and fuel producers might drill for extra pure fuel, its export amenities are already working at capability. Increasing these amenities would take years and billions of {dollars}.

Daly reported from Washington. AP author Geir Moulson contributed from Berlin and AP author Aamer Madhani contributed from Washington.