US president Joe Biden has banned imports of Russian oil and gas into the US as Washington sharply steps up economic sanctions on Moscow over its invasion of Ukraine in a bid to deprive it of a key source of revenue.
The move comes after days of debate within the Biden administration and between the US and western allies about the merits of banning Russian energy to punish President Vladimir Putin for the attack on Ukraine, as well as the risk it could trigger a new shock to global energy markets.
It opens a new front in western efforts to isolate Russia from the global economy, following moves to impose sanctions on key Russian banks, top government officials and oligarchs, as well as the Russian central bank.
“Russian oil will no longer be acceptable at US ports and the American people will deal another powerful blow to Putin’s war machine,” Biden said, speaking from the White House on Tuesday.
The UK is planning to follow suit, with Prime Minister Boris Johnson preparing to cut oil imports from Russia to zero over time, but Germany has so far resisted any prohibition on buying Russian crude.
“We’re moving forward this ban understanding that many of our European allies and partners may not be in a position to join us,” Biden said. “But we’re working closely with Europe and our partners to develop a long-term strategy to reduce their dependence on Russian energy as well.”
A ban on US imports will be far less disruptive to global markets than a full international embargo as only a small proportion of Russian shipments go to the US.
Russia, the world’s largest oil exporter, shipped almost 8mn barrels a day of crude and petroleum products to global markets at the end of last year, according to the International Energy Agency. About 60 per cent of Russia’s oil exports go to Europe — including around 2 per cent to the UK — while 8 per cent go to the US. China accounts for about 20 per cent.
Biden had been facing heavy pressure from members of Congress, both Republicans and Democrats, to plough ahead with an import ban on Russian oil, but had been resisting in an attempt to keep energy flowing around the world and prevent petrol prices from rising sharply at home.
The US president warned that “defending freedom” would bring costs to America as well in the form of higher prices, but he warned US energy companies against taking advantage of the increases.
“Russia’s aggression is costing us all and is no time for profiteering or price gouging,” Biden said.
Alexander Novak, Russia’s deputy prime minister, warned on Monday night that a potential ban could cause oil prices to more than double to $300 a barrel. He also said Russia had the option of switching off gas supplies to Europe via the original Nord Stream pipeline, but had chosen not to so far because “no one will benefit from it”.
Brent crude oil rose 7 per cent on Tuesday to about $132 a barrel as traders reacted to news of the US ban. West Texas Intermediate, the US benchmark, rose by a similar margin to $129.
Johnson is set to make an announcement later on Tuesday about his plan to wean Britain off Russian oil, but the country is less dependent than much of mainland Europe. Russian supplies make up 8 per cent of overall oil imports into the UK and account for 18 per cent of diesel.
The UK prime minister has also promised a new energy strategy to be published in the next fortnight, emphasising the need to increase production from North Sea oil and gasfields while also stepping up renewables and nuclear energy.
Olaf Scholz, Germany’s chancellor, on Monday rejected the idea of a European ban on Russian oil imports, saying he preferred to apply “sustainable” pressure on Moscow that would not impose too big a cost on Germans as energy consumers.
“The German government has been working hard for months with its partners within the EU and beyond to develop alternatives to Russian energy. However, this cannot be done overnight,” Scholz said.
Mohammed Barkindo, secretary-general of the Opec producer group, warned that there would be no way of filling the gap left by Russian oil in case of an all-out embargo.
“There is no capacity in the world at the moment that can replace 7mn barrels of exports,” he said at the CERAWeek energy conference in Houston on Monday.
Oil prices have surged in recent days as many big oil consumers have boycotted Russian oil even before the announcement of any official crude embargoes. Brent and West Texas Intermediate both ended 2021 at less than $80 a barrel.
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