Here's what a US ban on Russian oil could mean for you
What you should know about a U.S. ban on Russian oil importsΒ βΒ from the impact on gas prices to how it will affect Russia's war in Ukraine.
Here's what's happening
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As Russia has intensified its war on Ukraine, killing civilians and triggering a mass refugee crisis, President Joe Biden is expected to announce a ban on importing Russian fuel, according to a person familiar with the matter. Critics of Russia have said this would be the best β perhaps only β way to force Moscow to pull back.
A full embargo would be most effective if it included European allies, which are also desperate to stop the violence in Ukraine and the danger Moscow poses to the continent. Yet it's far from clear that Europe would take part in a total embargo.
Unlike the United States, Europe is deeply reliant on energy it imports from Russia. While the U.S. could replace the relatively small amount of fuel it receives from Moscow, Europe could not, at least not anytime soon.
What's more, any curbs on Russian oil exports would send already skyrocketing oil and gasoline prices ever higher on both continents and further squeeze consumers, businesses, financial markets and the global economy.
Here is a deeper look:
What will happen with a U.S. ban on Russian oil?
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Amid rising gasoline prices in the U.S. β the average price has topped $4 a gallon for the first time since 2008 β the Biden administration faces growing pressure to impose further sanctions on Russia, including a ban on oil imports.
For now, a broad U.S.-European ban appears elusive. On Monday, German Chancellor Olaf Scholz made clear that his country, Europe's single-largest consumer of Russian energy, has no plans to join in any ban. In response, U.S. Deputy Secretary of State Wendy Sherman hinted that the U.S. could act alone or with a smaller group of allies.
βWe have not been completely identical on all of the sanctions," Sherman said. βNot every country has done exactly the same thing, but we have all reached a threshold that is necessary to impose the severe costs that we have all agreed to.β
Even if a ban is enacted, the Biden administration and Congress βremain laser-focused on bringing down the higher energy costs for American families and our partners stemming from Putinβs invasion," House Speaker Nancy Pelosi said.
Pelosi, who has expressed support for a U.S. ban on Russian oil, nevertheless also cited Bidenβs action in leading U.S. allies to release 60 million barrels of oil from strategic reserves, including 30 million barrels from U.S. reserves, to try to stabilize global markets.
What happens if the U.S. acts alone?
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If the U.S. acts alone in banning imports of Russian oil and refined products, the impact on Moscow would likely be minimal. The United States imports a small share of Russia's oil exports and doesn't buy any of Moscow's natural gas.
Last year, roughly 8% of U.S. imports of oil and petroleum products came from Russia. Together, the imports totaled the equivalent of 245 million barrels in 2021, which was roughly 672,000 barrels of oil and petroleum products a day. But imports of Russian oil vary and have have been declining rapidly as buyers shunned the fuel.
The U.S. could replace Russian crude with imports from Saudi Arabia and the United Arab Emirates. For its part, Russia might find alternative buyers for that fuel, perhaps in China or India. Such a step "would introduce massive inefficiency in the market,β which escalates prices, said Claudio Galimberti, senior vice president of analysis at Rystad Energy.
Yet if Russia were shut off from the global market, Galimberti said, rogue countries such as Iran and Venezuela might be "welcomed back" as sources of oil. Such additional sources could, in turn, potentially stabilize prices.
A team of Biden administration officials were in Venezuela over the weekend to discuss energy and other issues, White House press secretary Jen Psaki said. Officials discussed βa range of issues, including certainly energy security,'' Psaki said.
How could a Russian oil ban affect prices?
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A month ago, oil was selling for about $90 a barrel. Now, prices are surging past $120 a barrel as buyers shun Russian crude, with many refiners fearing that sanctions could be imposed in the future. They worry about being left with oil they couldn't resell as gasoline if sanctions were imposed in the near future.
Shell said Tuesday that it would stop buying Russian oil and natural gas and shut down its service stations, aviation fuels and other operations there, days after Ukraineβs foreign minister criticized the energy giant for continuing to buy Russian oil.
Energy analysts warn that prices could go as high to $160 or even $200 a barrel for crude oil if oil sanctions are imposed by the West or if buyers continue shunning Russian crude.
Oil prices that high could send an average gallon of U.S. gasoline past $5 a gallon, a scenario that Biden and other political figures are desperate to avoid.
Are Russian imports already falling?
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The U.S. oil industry has said it shares the goal of reducing reliance on foreign energy sources and is committed to working with the Biden administration and Congress. Even without sanctions, some U.S. refiners have severed contracts with Russian companies. Imports of Russian crude oil and products have tumbled.
βOur industry has taken significant and meaningful steps to unwind relationshipsβ with Russia and voluntarily limit Russian imports, said Frank Macchiarola, senior vice president of the American Petroleum Institute, the oil and gas industryβs largest lobbying group.
Preliminary data from the U.S. Energy Department shows imports of Russian crude dropped to zero in the last week in February.
The petroleum institute hasn't taken a formal stance on legislation to ban Russian oil imports. But it says it would comply with any restrictions imposed.
Will Europe go along?
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A ban on Russian oil and natural gas would be painful for Europe. Russia provides about 40% of Europeβs natural gas for home heating, electricity and industry uses and about a quarter of Europe's oil. European officials are looking for ways to reduce their dependence, but it's going to take time.
Russian Deputy Prime Minister Alexander Novak underlined that urgency, saying Russia would have βevery rightβ to halt natural gas shipments to Europe through the Nord Stream 1 pipeline in retaliation for Germany halting the parallel Nord Stream 2 pipeline, which was not yet operating. He added that βwe have not taken this decisionβ and that βno one would benefit from this.β It was a change from earlier Russian assurances that they had no intention of cutting off gas to Europe.
Oil is easier to replace than natural gas. Other countries could increase production of oil and ship it to Europe. But much oil would have to be replaced, and this would drive up prices even more because the oil would likely have to travel farther.
Replacing the natural gas that Russia provides to Europe is likely impossible in the short term. Most of the natural gas Russia provides to Europe travels through pipelines. To replace it, Europe would mostly import liquefied natural gas, known as LNG. The continent doesn't have enough pipelines to distribute gas from coastal import facilities to farther reaches of the continent.
In January, two-thirds of American LNG exports went to Europe. Some ships filled with LNG had been heading to Asia but turned around to go to Europe because buyers there offered to pay higher prices, according to S&P Global Platts.
While U.S. oil and gas producers could drill for more natural gas, its export facilities are already operating at capacity. Expanding those facilities would take years and billions of dollars.
Biden to ban Russian oil imports over Ukraine war, source says
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In this image provided by the White House, President Joe Biden listens during a secure video call with French President Emmanuel Macron, German Chancellor Olaf Scholz and British Prime Minister Boris Johnson in the Situation Room at the White House Monday, March 7, 2022, in Washington.Β
WASHINGTON (AP) β President Joe Biden has decided to ban Russian oil imports, toughening the toll on Russia's economy in retaliation for its invasion of Ukraine, according to a person familiar with the matter.
The move follows pleas by Ukrainian President Volodymyr Zelenskyy to U.S. and Western officials to cut off the imports, which had been a glaring omission in the massive sanctions put in place on Russia over the invasion. Energy exports have kept a steady influx of cash flowing to Russia despite otherwise severe restrictions on its financial sector.
Biden was set to announce the move as soon as Tuesday, the person said, speaking on condition of anonymity to discuss the matter before his remarks. The White House said Biden would announce "actions to continue to hold Russia accountable for its unprovoked and unjustified war on Ukraine."
The U.S. will be acting alone, but in close consultation with European allies, who are more dependent on Russian energy supplies. European nations have said they plan to reduce their reliance on Russia for their energy needs, but filling the void without crippling their economies will likely take some time. Natural gas from Russia accounts for one-third of Europe's consumption of the fossil fuel. The U.S. does not import Russian natural gas.
Biden had explained his reluctance to impose energy sanctions at the outset of the conflict two weeks ago, saying that he was trying "to limit the pain the American people are feeling at the gas pump." Full story here:
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PHOTO GALLERY
Photos: The latest images of refugees escaping war in Ukraine
Moldova Russia Ukraine War
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Refugees fleeing the war from neighbouring Ukraine arrive at the border crossing in Palanca, Moldova, Monday, March 7, 2022. (AP Photo/Sergei Grits)
Moldova Russia Ukraine War
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Refugees fleeing the war from neighbouring Ukraine arrive at the border crossing in Palanca, Moldova, Monday, March 7, 2022. (AP Photo/Sergei Grits)
Poland Russia Ukraine War
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Refugees wrapped in thermal blanket wait in a crowd for transportation after fleeing from the Ukraine and arriving at the border crossing in Medyka, Poland, Monday, March 7, 2022. Russia announced yet another cease-fire and a handful of humanitarian corridors to allow civilians to flee Ukraine. Previous such measures have fallen apart and Moscowβs armed forces continued to pummel some Ukrainian cities with rockets Monday. (AP Photo/Visar Kryeziu)
Poland Russia Ukraine War
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Refugees warm up inside a plastic tent after fleeing from the Ukraine and arriving at the border crossing in Medyka, Poland, Monday, March 7, 2022. Russia announced yet another cease-fire and a handful of humanitarian corridors to allow civilians to flee Ukraine. Previous such measures have fallen apart and Moscowβs armed forces continued to pummel some Ukrainian cities with rockets Monday. (AP Photo/Visar Kryeziu)
Poland Russia Ukraine War
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Refugees wait in a crowd for transportation after fleeing from the Ukraine and arriving at the border crossing in Medyka, Poland, Monday, March 7, 2022. Russia announced yet another cease-fire and a handful of humanitarian corridors to allow civilians to flee Ukraine. Previous such measures have fallen apart and Moscowβs armed forces continued to pummel some Ukrainian cities with rockets Monday. (AP Photo/Visar Kryeziu)
Hungary Russia Ukraine War Refugees
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Australian-Hungarian volunteers Tamas and Ilona Marghescu prepare traditional Hungarian meat stew for Ukrainian refugees at the train station in Zahony, Hungary, Sunday, March 6, 2022. Tamas and Ilona said that as children of refugees themselves, they feel a responsibility to help. (AP Photo/Darko Vojinovic)
APTOPIX Poland Russia Ukraine War
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A woman wraps herself in a blanket to keep warm as she waits in a crowd of refugees after fleeing from the Ukraine and arriving at the border crossing in Medyka, Poland, Monday, March 7, 2022. Hundreds of thousands of Ukrainian civilians attempting to flee to safety Sunday were forced to shelter from Russian shelling that pummeled cities in Ukraineβs center, north and south. (AP Photo/Markus Schreiber)
Poland Russia Ukraine War
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Refugees, mostly women and children, wait in a crowd for transportation after fleeing from the Ukraine and arriving at the border crossing in Medyka, Poland, Monday, March 7, 2022. Hundreds of thousands of Ukrainian civilians attempting to flee to safety Sunday were forced to shelter from Russian shelling that pummeled cities in Ukraineβs center, north and south. (AP Photo/Markus Schreiber)
APTOPIX Poland Russia Ukraine War
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Refugees wait in a crowd for transportation after fleeing from the Ukraine and arriving at the border crossing in Medyka, Poland, Monday, March 7, 2022. Hundreds of thousands of Ukrainian civilians attempting to flee to safety Sunday were forced to shelter from Russian shelling that pummeled cities in Ukraineβs center, north and south. (AP Photo/Markus Schreiber)
Russia Ukraine War Day In Photos
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Refugees fleeing the war in Ukraine, form a line as they approach the border with Poland in Shehyni, Ukraine, Sunday, March 6, 2022. (AP Photo/Daniel Cole)
APTOPIX Russia Ukraine War
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The faces of refugees fleeing the war in Ukraine are illuminated by the light from a smartphone as they join a line approaching the border with Poland in Shehyni, Ukraine, Sunday, March 6, 2022. The number of Ukrainians forced from their country increased to 1.5 million and the Kremlin's rhetoric grew, with Russian President Vladimir Putin warning that Ukrainian statehood is in jeopardy. (AP Photo/Daniel Cole)
Russia Ukraine War
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A coach driver watches as refugees fleeing the war in Ukraine, form a line as they approach the border with Poland in Shehyni, Ukraine, Sunday, March 6, 2022. The number of Ukrainians forced from their country increased to 1.5 million and the Kremlin's rhetoric grew, with Russian President Vladimir Putin warning that Ukrainian statehood is in jeopardy. (AP Photo/Daniel Cole)
Russia Ukraine War
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A refugee walks along the road approaching the border with Poland in Shehyni, Ukraine, Sunday, March 6, 2022. The number of Ukrainians forced from their country increased to 1.5 million and the Kremlin's rhetoric grew, with Russian President Vladimir Putin warning that Ukrainian statehood is in jeopardy. (AP Photo/Daniel Cole)
APTOPIX Russia Ukraine War
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Refugees fleeing the war in Ukraine, form a line as they approach the border with Poland in Shehyni, Ukraine, Sunday, March 6, 2022. The number of Ukrainians forced from their country increased to 1.5 million and the Kremlin's rhetoric grew, with Russian President Vladimir Putin warning that Ukrainian statehood is in jeopardy. (AP Photo/Daniel Cole)
Hungary Russia Ukraine War
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Refugees that fled Ukraine from the war arrive at the train station in Zahony, Hungary, Sunday, March 6, 2022. The number of Ukrainians forced from their country increased to 1.5 million and the Kremlin's rhetoric grew, with Russian President Vladimir Putin warning that Ukrainian statehood is in jeopardy. He likened the West's sanctions on Russia to "declaring war." (AP Photo/Darko Vojinovic)
Britain Russia Ukraine War
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A demonstrator holds a placard saying 'Refugees always welcome' during an anti-war march, in London, Sunday, March 6, 2022. On Day 11 of Russia's war on Ukraine, Russian troops shelled encircled cities, and it appeared that a second attempt to evacuate civilians from the besieged port city of Mariupol had failed due to continued violence. (AP Photo/Alberto Pezzali)
Russia Ukraine War Romania Shelter
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Refugees who fled the Russian invasion from neighbouring Ukraine are reflected in the golden ceiling of a ballroom converted into a makeshift refugee shelter at a 4-star hotel & spa, in Suceava, Romania, Friday, March 4, 2022. At 4-star hotel & spa some 50 km from the border with Ukraine, wedding parties and conferences have been canceled and the ballroom converted into a makeshift refugee shelter where those who have escaped the Russian invasion come to rest and warm up before continuing their journey. (AP Photo/Andreea Alexandru)
Russia Ukraine War Romania Shelter
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A man sits next to piles of chairs that have been moved to accommodate refugees who fled the Russian invasion from neighbouring Ukraine, inside a ballroom converted into a makeshift refugee shelter at a 4-star hotel & spa, in Suceava, Romania, Friday, March 4, 2022. At 4-star hotel & spa some 50 km from the border with Ukraine, wedding parties and conferences have been canceled and the ballroom converted into a makeshift refugee shelter where those who have escaped the Russian invasion come to rest and warm up before continuing their journey. AP Photo/Andreea Alexandru)
APTOPIX Russia Ukraine War Romania Shelter
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Refugees who fled the Russian invasion from neighbouring Ukraine sit inside a ballroom converted into a makeshift refugee shelter at a 4-star hotel & spa, in Suceava, Romania, Friday, March 4, 2022. At 4-star hotel & spa some 50 km from the border with Ukraine, wedding parties and conferences have been canceled and the ballroom converted into a makeshift refugee shelter where those who have escaped the Russian invasion come to rest and warm up before continuing their journey. (AP Photo/Andreea Alexandru)
Russia Ukraine War Romania Shelter
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A child refugee who fled the Russian invasion from neighbouring Ukraine with his mother and grandmother plays with a yellow ballon as he sits on a mattress inside a ballroom converted into a makeshift refugee shelter at a 4-star hotel & spa, in Suceava, Romania, Friday, March 4, 2022. At 4-star hotel & spa some 50 km from the border with Ukraine, wedding parties and conferences have been canceled and the ballroom converted into a makeshift refugee shelter where those who have escaped the Russian invasion come to rest and warm up before continuing their journey. (AP Photo/Andreea Alexandru)
Russia Ukraine War Romania Shelter
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A refugee who fled the Russian invasion from neighbouring Ukraine comforts her dog as they sit in a ballroom converted into a makeshift refugee shelter at a 4-star hotel & spa, in Suceava, Romania, Friday, March 4, 2022. At 4-star hotel & spa some 50 km from the border with Ukraine, wedding parties and conferences have been canceled and the ballroom converted into a makeshift refugee shelter where those who have escaped the Russian invasion come to rest and warm up before continuing their journey. (AP Photo/Andreea Alexandru)
Poland Russia Ukraine War
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A woman hugs a child as refugees, mostly women with children, arrive at the border crossing in Medyka, Poland, Sunday, March 6, 2022. (AP Photo/Visar Kryeziu)
APTOPIX Poland Russia Ukraine War
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Refugees, mostly women with children, rest inside a tent after arriving at the border crossing, in Medyka, Poland on Sunday, March 6, 2022. (AP Photo/Visar Kryeziu)
Romania Russia Ukraine War
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A refugee fleeing the conflict from neighbouring Ukraine enters a tent at the Romanian-Ukrainian border, in Siret, Romania, Saturday, March 5, 2022. (AP Photo/Andreea Alexandru)
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