The United States and United Kingdom ban Russian oil

The United States and United Kingdom have decided to prohibit the importation of oil and gas from Russia, doubling down on the West’s sanctions against Moscow after the invasion of Ukraine. The move is a direct hit to the Eurasian giant’s economy. Other European allies, who rely much more on Russian fossil fuels, have held off on a ban. Speaking on Tuesday, US President Joe Biden recognized that Europeans “may not be in a position to join” this move. And he warned that the embargo won’t be easy for Americans, who currently face the worst inflation rates in 40 years. “Defending freedom is going to cost,” he said.

The announcement comes after almost two weeks of war in Ukraine, which has created two million Ukrainian refugees and left images of dead civilians that have shocked the planet. Washington and Europe have avoided deploying their own troops to defend the former Soviet republic, which is not a member of NATO. But the allies have agreed to support the resistance by sending arms and passing an unprecedented arsenal of economic sanctions.

“The United States produces far more oil domestically than all the European countries combined, so we can take this step when others cannot. But we’re working closely with Europe to develop a long-term strategy to reduce their dependence on Russian energy,” Biden said on Tuesday at the White House. The Democratic politician also stated that the United States will receive Ukrainian refugees so that the costs “do not fall entirely” on Europe. He insisted that Ukraine “will never be a victory” for Russian President Vladimir Putin. “[He] may be able to take a city, but he’ll never be able to hold the country,” Biden said.

The leader had spent several days weighing up the oil embargo under growing pressure from the United States Congress, which plans to vote on a bipartisan piece of legislation supporting Ukraine this week. Democrats and Republicans both support the measure, a rare occurrence in the current moment of political polarization. “We will not be part of subsidizing Putin’s war,” Biden said on Tuesday.

Russia represents 8% of the United States’ oil imports, and the ban’s global repercussions will affect American companies. Before the prospect of an embargo, the New York Stock Exchange’s S&P Index went down 3% on Monday, the worst fall since October 2020. A barrel of Texas oil – the WTI, a reference point for the United States – climbed 4% when the exchange opened this Tuesday, and the median price of gasoline has reached $4 a gallon, a price not seen since 2008. The numbers will put pressure on the government as midterm elections approach this November.

The United Kingdom also relies on Russia for 8% of its gasoline supply. “The UK will phase out the import of Russian oil and oil products by the end of 2022,” Secretary of State for Business, Energy and Industrial Strategy Kwasi Kwarteng announced on Twitter. “This transition will give the market, businesses and supply chains more than enough time to replace Russian imports – which make up 8% of UK demand,” he added. British Prime Minister Boris Johnson has kept pace with the White House’s decisions, despite his reluctance: “You can’t simply close down the use of oil and gas overnight, even from Russia,” he said on Monday.

Talks of the embargo have been shaking up the market for several days. In a Sunday television interview, US Secretary of State Antony Blinken explained that his government was “intensely” debating the issue with European partners, though Germany clarified on Monday that it was not considering banning Russian oil. “At the moment, Europe’s supply of energy for heat generation, mobility, power supply and industry cannot be secured in any other way,” German chancellor Olaf Scholz stated. Even so, the price of gas and oil spiked in the country.

In a press briefing this Tuesday in the city of Tallin, Blinken urged European countries to work toward autonomy from Russian energy. “There is a significant imperative in this moment to finally move off of dependence on Russian energy,” the American head of diplomacy said in the Estonian capital. That day, the European Commission presented a plan to reduce importations of Russian gas by two-thirds this year. The program will be debated in a summit in Paris at the end of this week.

Ukrainian president Volodymyr Zelenskiy, who spoke via videoconference to the British House of Commons on Tuesday evening, has asked in recent days for allies to end oil imports in order to cut off funds to the Russian government. Despite the severity of economic sanctions approved by the United States, the European Union and the United Kingdom, the oil industry has remained a source of income for Russia. In response to Zelenskiy, Prime Minister Johnson confirmed his government’s decision to prohibit Russian oil imports.

On Monday, White House spokesperson Jen Psaki said that “no decision” had been taken yet. She admitted that the implications are different on the other side of the Atlantic. “Russian imports account for about a third of Europe’s oil imports,” she said. “The amount that the United States was importing before the invasion was about 700,000 barrels per day of crude oil and petroleum. The Europeans import about 4.5 million barrels per day of oil. So, obviously, we are aware that we have different capacities and capabilities,” she emphasized.

Republican and Democrat legislators have been pressuring Biden for weeks to adopt the measure that hits the heart of Russia’s economy, as the invasion has thrown Europe into an unprecedented crisis since the Second World War. The speaker of the House of Representatives, Nancy Pelosi, confirmed on Monday that she plans to move forward on the oil embargo vote. Speaking on CNN, Democratic senator Chris Coons summarized the sentiment in Washington: “We are going to see increased gas prices here in the United States. In Europe, they will see dramatic increases in prices. That’s the cost of standing up for freedom and standing alongside the Ukrainian people.”

To minimize the hit to its citizens’ wallets, the Biden administration has taken the unprecedented step of approaching Venezuela. The White House spokesperson confirmed on Monday that an American delegation had met this week with Nicolas Maduro’s regime to discuss different issues, including “energy security.” In order to contain the global price jump, Biden also gave a green light to the liberation of 30 million barrels from United States oil reserves. The president warned the industry not to take advantage of the situation to gouge prices.