The ban by President Joe Biden on Russian oil came as gas prices rose to an all-time high. This has left Americans wondering how much more they'll have to pay at the pump, and if this move will actually discourage Russia's attack on Ukraine.
Biden stated Tuesday that all Russian oil, gas and energy imports will be banned. "Russian oil will not be accepted at U.S. ports and the American people will deal a powerful blow to Putin’s war machine."
Although the president expressed concern that this move could increase gasoline prices in America, he said that it was necessary to intensify sanctions on Russia in response to Russia's war against Ukraine.
Biden stated that Putin's war was already affecting American families at gas pumps. "I will do all I can to reduce Putin's price rise here at home."
How will America's ban on Russian oil be impacted at the pump?
Jesse Wheeler, an economic analyst at Morning Consult, stated that even though the U.S. produces enough crude oil for domestic consumption, oil remains a global market.
Wheeler stated that if the global supply falls, the global price of gas will rise. "As crude oil prices rise in the United States and around the world, gas prices in the United States will go up as well."
According to AAA, gasoline has already reached a record $4.17 per gallon for unleaded gasoline on Tuesday. This surpasses the July 2008 record of $4.10 per gallon.
Oil was trading at $90 per barrel a month ago. Prices are now above $120 because buyers have stopped buying Russian crude oil. Many refiners fear that tougher sanctions against Russia will limit their ability to move supplies.
Shell declared Tuesday that it would stop purchasing Russian crude oil and other products from Russia "in a gradual manner".
Analysts in energy warn that crude oil prices could rise to $200 per barrel if sanctions are lifted by the West. The average cost of a gallon U.S. gasoline at this level could rise to $5. This is a scenario Biden, and other politicians, are trying to avoid.
On Tuesday, however, Biden focused much of his remarks on redirecting Americans' anger towards Russian President Vladimir Putin and encouraging U.S. oil companies to produce more domestically.
According to the president, the U.S. As part of a global effort by consumers and businesses to protect themselves from rising fuel prices, the U.S. and its allies plan to release 30,000,000 barrels of oil from their Strategic Petroleum Reserve.
He said that the U.S. contribution was part of a larger effort by 30 countries to remove 60 million barrels from oil reserves around the globe.
How much oil do the U.S. import form Russia?
According to data from last year, Russian oil only accounts for about 8 percent of U.S. crude oil imports. Rystad Energy estimates that this accounts for approximately 5 percent of Russia’s crude oil exports.
However, Europe is heavily dependent on Russian oil which accounts for around a third its total crude oil imports.
The U.S. gets approximately 700,000 barrels per day from Russia, but Europe receives 4.5 million barrels per day.
According to Morning Consult (a global business intelligence firm), the United States produces the majority of its crude oil domestically. The bulk of the crude oil products that the U.S. imports is from Mexico and Canada.
How does Russia's ban by the U.S. affect it?
Moscow will be unlikely to feel any impact since the U.S. receives so little oil from Russia.
Europe's ban on oil imports from Russia will have far greater consequences.
"Biden's decision not to allow U.S. oil imports from Russia is notable, but the movement towards a European ban of Russian oil imports and gas imports would be the real show-stopper, given Europe's high dependence on Russian energy supplies," Jason McMann of Morning Consult's geopolitical risk analysis, stated. If it happens, such a move would have significant economic and geopolitical consequences.
Biden admitted Tuesday that "We can make this step when other people cannot." "But, we are working closely with Europe as well as our partners to develop long-term strategies to reduce their dependence upon Russian energy."
Kwasi Kwarteng (UK's business and Energy Secretary) announced that his government would stop importing Russian oil and products by 2022.
In a series tweets, he stated that "This transition will allow the market and businesses more than enough time for Russian imports --which make up 8% UK demand" Businesses should take advantage of this year to ensure smooth transition for consumers.
German Chancellor Olaf Scholz stated Monday that Russia was deliberately exempted from sanctions by Europe because there is currently no other way to secure Europe's energy supply for heat generation, mobility, power supply, and industry.
Scholz stated that Germany has been working with its allies in order to develop alternative energy sources to Russian energy but that this "doesn’t happen overnight."
Mark Rutte, the Dutch Prime Minister, warned that countries could move too fast to ban Russian oil or gas. This could have "enormous" consequences.
Dmytro Kunleba, Ukraine’s foreign minister, said Monday in a Washington Post editorial that countries should stop buying Russian oil. "Russian oil is now contaminated with Ukrainian blood."