.As Russia warns of $300/bbl oil price
President Joe Biden, yesterday, banned the import of Russian energy products – oil, gas and coal, “the main artery of Russia’s economy” into the United States (U.S.).
In a broadcast, from the White House, Biden said: “We’re banning all imports of Russian oil and gas and energy.
“That means Russian oil will no longer be acceptable at U.S. ports and the American people will deal another powerful blow to Putin’s war machine.”
The President said the U.S. had made the decision to ban Russian energy products “in close consultation” with allies around the world, particularly in Europe, even as many of those partners may not be able to take the same action.
He also warned that the move would probably increase gas prices in the U.S., but that it was necessary to ramp up sanctions pressure on Russia’s economy for its war on Ukraine.
This comes ahead of Russia’s warning on Monday of oil prices likely to reach a $300 per barrel mark or more if the West goes ahead with a ban on its energy exports.
Implication of ban
Biden admitted that “Putin’s war is already hurting American families at the gas pump,” and promised “to do everything I can to minimize Putin’s price hike here at home.”
He however reassured that “The United States produces far more oil domestically than all of Europe,” and a net exporter of energy. “We can take this step when others cannot, 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.”
Also, U.S. energy companies are encouraged to produce more domestic oil.
Afterward, Biden signed an executive order to ban the import of Russian oil, liquified natural gas and coal to the U.S., a senior administration official said.
The order blocks any new purchases of those energy products and winds down the deliveries of existing purchases that have already been contracted for.
The White House said the action also bans new U.S. investment in Russia’s energy sector and prohibits Americans from participating in foreign investments that flow into that sector in Russia.
We can take this step when others cannot, 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.
Energy market disruption
In an address on state television on Monday, Russian Deputy Prime Minister, Alexander Novak, said: “It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market.
“The surge in prices would be unpredictable. It would be $300 per barrel if not more.”
Russia also threatened to close a major gas pipeline to Germany, citing the latter’s decision last month to halt the certification of the highly contentious Nord Stream 2 gas pipeline.
Novak said: “We have every right to take a matching decision and impose an embargo on gas pumping through the Nord Stream 1 gas pipeline.
“So far, we are not taking such a decision. But European politicians with their statements and accusations against Russia push us towards that.”
Energy analysts also agreed that a ban on Russia’s oil and gas would have seismic repercussions for energy markets and the world economy.
This is because Russia is the world’s third-largest oil producer, behind the U.S. and Saudi Arabia, and the world’s largest exporter of crude to global markets. It is also a major producer and exporter of natural gas.
The European Union (EU) receives around 40% of its gas via Russian pipelines, several of which run through Ukraine.