The attack on Ukraine triggered the worst humanitarian crisis on European soil since World War II, and the US has targeted the heart of the Russian economy: its energy sector. Secretary of State Anthony Blinken said Sunday the Biden administration was in “very active negotiations” to ban Russian oil imports to the US, while a bipartisan group of senators also called for a ban.
Oleg Ustenko, economic adviser to the president of Ukraine, wrote an op-ed over the weekend calling on the world to stop what he called Russia’s “blood oil” that supplies Moscow with nearly $1 billion a day and which he says is funding the war in Ukraine . “Do not buy anything in Russia,” he wrote.
With such calls resonating on Capitol Hill, analysts at Goldman Sachs said on Monday that a congressional vote to ban Russian oil imports is likely to come with “fairly broad support.”
With US gas prices approaching record highs, here’s what a ban on Russian oil imports would mean for Americans at gas stations and elsewhere.
What would a ban look like?
The US is much less dependent on Russian oil than Europe. Last year, about 8% of US oil imports came from Russia, while as of January there was almost no Russian oil entering the US, said Troy Vincent, senior market analyst at DTN, a commodity research firm.
Vincent and other analysts say this makes it more likely that the US will act on its own to punish Russian energy with oil-related sanctions that could later be joined by the European Union, which is much more dependent on Russian oil and gas.
According to Vincent, US sanctions can take two forms. A stricter option for the US is to impose sanctions on Russian oil exports – not to buy Russian oil and refuse to engage with any country that has done so, similar to how the US has been approaching sanctions against Iran in recent years.
Schiff signals ‘strong bipartisan support’ for Russian oil and gas ban 06:51
A softer and more likely option is to impose an American embargo on Russian energy resources. “We will say: “No one in the US will touch Russian oil, but we will leave the EU to decide its own fate,” Vincent said.
Less oil, more gas
In the short term, moving away from Russian oil is likely to push skyrocketing gas prices in America even further.
“We believe that a complete ban on energy imports from Russia will lead to an increase in the price of Brent oil and European natural gas to $160. [per barrel]”says economists at Capital Economics in a report.
According to energy analysts and economists, this level will cancel the all-time record of $147 per barrel, reached in the summer of 2008, and push average US gas prices above $5 per gallon.
A Quinnipiac poll released on Monday found that the vast majority of Americans are in favor of banning Russian oil, even if that means higher gas prices. However, this attitude may change once motorists discover that they are actually paying much more for gas stations while inflation eats into other parts of their family budget.
“We’re negative about Russia until you start really explaining what the costs are to the US, and then people get a little softer,” said Clayton Allen, US managing director at Eurasia Group, a policy agency. risk research firm.
“If Biden wants to take really strict measures, it might be better to do it earlier, while public opinion is on his side,” Allen said.
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Gas prices, already a political albatross for President Biden, are clearly weighing on the diplomatic decision, and White House officials have stressed their reluctance to take any steps that could push gas prices even higher.
With the sanctions, “U.S. energy prices are going to have to go up — it could be a short-term increase, but they’re clearly worried about it,” Allen said. “They didn’t spend as much time as I expected trying to tame the idea that American consumers might have to bear some of the cost of isolating and punishing Russia.”
Wild cards: Iran and Venezuela
To limit the impact of higher prices, the US and international partners are releasing oil from reserves. Allen said historically, every time a national strategic petroleum reserve (SRP) opens, gas prices drop by two to three weeks.
“If you’re worried about $5 gas, issuing an SRP won’t bring gas back to $3.50, but it will prevent the oil market from shutting down like it did in the 1970s,” Allen said.
The Biden administration is also in talks to re-join Iran to the nuclear control agreement, which would bring Iranian oil back to the world market. At present, Iran can produce about one-fifth of the oil that would go off the market if Russia left, DTN’s Vincent said.
The US is also seeking to ease relations with Venezuela, which has been banned from selling oil to the US since the Trump administration.
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