WASHINGTON — On Tuesday, President Joe Biden said the U.S. will ban all Russian oil imports, toughening the toll on Russia’s economy in retaliation for its invasion of Ukraine. He acknowledged, though, that it will bring rising costs to Americans, particularly at the gas pump.
Biden's decision followed Ukrainian President Volodymyr Zelenskyy's plea to U.S. and Western officials to cut off the imports. Energy exports have kept a steady stream of cash flowing to Russia despite otherwise severe restrictions it faces.
CERAWeek, the world's largest energy conference, is meeting in Houston this week. Industry leaders from across the world discussed what oil sanctions mean for you. They said they're still trying to understand the long-term effects the sanctions will have on the global market.
Surging prices for oil and other vital commodities, such as wheat used in subsidized bread and noodles, are rattling global markets. Worries are growing that the invasion of Ukraine will upend already tight oil supplies, as Russia is one of the world’s largest energy producers.
The average price for a gallon of gasoline in the U.S. hit a record $4.17 Tuesday, shortly before Biden officially announced the ban on Russian oil imports.
The average price rose by 10 cents per gallon in one day, and it’s up 55 cents since last week, according to AAA data.
Even before the U.S. 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, apologized for the move on Tuesday amid international criticism and pledged to halt further purchases of Russian energy supplies. Preliminary data from the U.S. Energy Department shows imports of Russian crude dropped to zero in the last week in February.
In 2021, the U.S. imported roughly 245 million barrels of crude oil and petroleum products from Russia — a one-year increase of 24%, according to the U.S. Energy Information Administration.
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 U.S. 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.
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 U.S. energy imports, the U.S. could replace Russian crude with imports from other oil-rich nations, but that could prove politically problematic.
Key U.S. senators are warning the Biden administration from seeking any oil import deal from the Nicolas Maduro regime in Venezuela.
A growing number of multinational businesses have cut Russia off from vital financial services or stopped operating in the country. Among the most recent is McDonald's, which said it will temporarily shutter all its 850 restaurants in Russia but will keep paying wages, for now, to 62,000 workers there.