Biden bans imports of all Russian fossil fuels amid broad bipartisan support

The US will ban imports of Russian oil, natural gas, and coal, according to President Joe Biden. The UK will stop buying Russian oil and gas over the next few months, according to a report.

The coordinated moves will add more pressure on Putin's regime. Russian crude oil and related products made up 8 percent of US imports last year, while the UK imported about a third of its oil and 5 percent of its gas from the country.

I am announcing that the United States is targeting the main arteries of Russia's economy. The American people will deal another blow to Putin by banning Russian oil from US ports.

Eighty percent of Americans agree that the US should stop buying Russian oil and gas, according to a recent poll. Sixty-two percent of respondents said that paying more at the pump would be worth it to help defend Ukraine.

Craig Kafura is a public opinion expert at the Chicago Council on Global Affairs.

The US and its allies will release 60 million barrels of oil from their strategic reserves in order to counteract the loss of Russian oil. Biden applauded the exits of oil and gas firms from the Russian market, but warned them not to use the crisis as an excuse to raise prices excessively.

A transition away from fossil fuels would break the grip that many dictators have on the energy market. It would mean that households wouldn't have to worry about oil and gas prices in the future.

Advertisement

Russian oil and gas has a relatively small footprint in the US market, but the Biden administration is concerned about stoking inflation. With the public outcry over the invasion and bipartisan support for further sanctions against Russia, Biden has an easy opening to exert additional financial pressure on the Kremlin. 40 percent of Russia's federal budget last year was spent on gas and oil.

The oil market has already priced in an oil import ban from the US.

Biden's import ban follows a mass exodus of Western oil and gas companies from Russia. A write-down by the supermajor will cost it about 14 billion dollars, after it abandons its stake in the state-controlled oil company. The German Chancellor paused the Nord Stream 2 natural gas line last month after Shell said it was pulling out. ExxonMobil said it was leaving Russia as well.

Russian oil and gas companies are still allowed to sell to most of the world, but the oil market has created its own embargo. Banks are hesitant to lend for Russian oil transactions, fearing they will run afoul of sanctions, and refiners are hesitant, worried that any purchases they make won't arrive if oil tanker are seized, again due to sanctions.

As a result, the price of Russian oil, represented by its flagship product, Urals crude, has plummeted relative to Brent crude, the de facto global benchmark. Today, one barrel of Urals crude trades at a 25 percent discount.

Even with the discount, the Russian government may be able to make a profit in the short term. The budget was created by the Kremlin if it could sell oil for $44.20 per barrel. Shell bought Russian crude for $85 per barrel despite the claim that it was exiting the Russian market.

It is not known whether the country can maintain its level of production and profit. Russian oil and gas companies are their own. They will no longer benefit from the expertise offered by Western supermajors, and sanctions may limit their access to tools and technologies needed to drill and pump effectively and efficiently.