What a U.S. ban on Russian oil would mean for Americans

With the attack Ukraine causing the worst humanitarian crisis on European soil since World War II, the US is at the heart of the Russian economy: its energy sector. Secretary of State Antony Blinken said on Sunday that the Biden administration is in “very active discussions” over the ban on Russian oil imports into the US, while a bipartisan group of senators has also called for a ban.

Oleg Ustenko, economic adviser to the President of Ukraine, last weekend wrote an opinion piece asking the world to cut what he denounced as Russia’s “blood oil”, which supplies about $ 1 billion per day in Moscow and which, he said, is being funded. the war in Ukraine. “Don’t buy anything from Russia,” he wrote.

As such requests resonate at the Capitol, Goldman Sachs analysts said Monday that a vote in Congress on a ban on Russian crude oil imports would likely pass with “fairly broad support.”

With gas prices in the US close to the all-time highthat would mean banning imports of Russian oil for Americans at the pump and elsewhere.

What a ban it might look like

The US is much less dependent on Russian oil than Europe. Last year, about 8 percent of U.S. oil imports came from Russia, while in January almost no Russian oil entered the U.S., said Troy Vincent, a senior market analyst at DTN, a raw material research.

Vincent and other analysts say this makes the U.S. more likely to go it alone to penalize Russian energy by imposing oil-related sanctions on the European Union, which is much more dependent on Russian oil and gas. , could join later.

U.S. sanctions could take two forms, Vincent said. The most severe option is for the United States to penalize Russian oil exports: not to buy Russian oil and refuse to associate with any nation that does so, just as the United States approached sanctions on Iran in recent years.

The softest and most likely option is to impose a US embargo on Russian energy. “We will say, ‘No one in the US will touch Russian oil, but let the EU decide its own destiny,'” Vincent said.

Less oil, more expensive gasoline

In the short term, the elimination of Russian oil would probably drive very high gas prices in America even higher.

“We believe that a total ban on Russian energy imports will increase the prices of Brent crude oil and European natural gas to $ 160. [per barrel]”Economists from Capital Economics said in a research report.

That level would obliterate the historic record of $ 147 a barrel, reached in the summer of 2008, and raise average U.S. gas prices above $ 5 a gallon, according to energy analysts and economists.

A Quinnipiac poll released Monday found an overwhelming majority of Americans in favor of banning Russian oil, even if it means rising gas prices. However, that attitude could change once motorists find themselves actually paying much more at the pump while inflation eats away at other parts of family budgets.

“We’re negative with Russia until you start really explaining what the costs are for the United States, and then people start to get a little softer,” said Clayton Allen, director general for the United States of the Eurasia Group, a group politician. risk research company.

“If Biden wants to impose really strict measures, maybe it would be better to do it sooner while public sentiment is on his side,” Allen said.

Gas prices, which are already a political albatross for President Biden, are clearly weighed on the diplomatic decision, and White House officials have stressed their reluctance to take steps to further raise gas prices.

With sanctions, “energy prices in the U.S. will have to go up, this may be a short-term increase, but it’s something that obviously worries them,” Allen said. “They haven’t spent as much time as I would have expected trying to tame the idea that American consumers may have to bear some of the costs of isolating and punishing Russia.”

Wildcards: Iran and Venezuela

To limit the impact of rising prices, US and international partners are releasing oil from reserves. Historically, every time the The nation’s Strategic Oil Reserve (SRP) opens, gas prices fall for two to three weeks, Allen said.

“If you’re worried about gas being $ 5, an SRP release won’t return gas to $ 3.50, but it will prevent the oil market from taking over as it did in the 1970s,” Allen said.

The Biden administration is also negotiating the re-entry of Iran into a nuclear control agreement, which would return Iranian oil to the world market. Iran can currently produce about a fifth of the oil that would go off the market in the event of Russia’s exit, Vincent of DTN said.

The United States is also seeking to ease relations with Venezuela, which has been banned from selling oil to the United States since the Trump administration.

In:
• Ukraine
• Russia
• gas prices