President Joe Biden announced an historic U.S. ban on Russian oil imports on Tuesday as the latest round of sanctions against Russia for its invasion of Ukraine, but as energy prices continue to surge, experts warn that that could result in higher inflation and slower economic growth.
Experts warn that soaring oil prices could put more pressure on consumers.
The ban on Russian oil imports was announced by President Biden on Tuesday, the latest in a series of sanctions against Putin's regime.
The US benchmark West Texas Intermediate is now at $126 per barrel, while the global benchmark is at around $130 per barrel.
The ban will put pressure on the price of oil and thus pressure the consumer, because direct imports of Russian oil are a small portion of the total imported by the U.S.
The US ban on Russian oil imports will likely cause decades-high inflation and lead to slower economic growth, according to several major economists.
The impact on consumers from surging commodity prices will lead to a decline in U.S. GDP growth in 2022, according to analysts at both Goldman and Bank of America.
If further restrictions are placed on Russian energy markets, experts predict that oil prices could surge to more than $150 per barrel, even as high as $200 per barrel, for a sustained period of time.
The average price of a gallon of gas in the US hit a new all-time high of more than $4.17 on Tuesday. If uncertainty continues around the Russia-Ukraine conflict and oil prices spike above $150 per barrel, the US could see gas prices go up to more than $5 per gallon.
Russia's invasion of Ukraine and the Western response to it will increase the supply-demand imbalance that is at the heart of the global inflation surge.
A coordinated cutoff of Russian energy markets by the West would be more effective, according to a recent note by Bank of America's head of global economics. European allies have yet to impose a similar ban on Russian oil and natural gas, despite the U.S. acting alone on Tuesday. Europe relies on Russian energy imports for 30% of its oil and 40% of its natural gas, and has no easy substitute if those supplies are disrupted.
Russia warned that a ban on its energy markets could cause oil prices to go to $300 per barrel.
Some experts are warning about the risk of a recession in the not so distant future, even though economists from Goldman and Bank of America predict a modest economic impact from surging energy prices.
The US has a historic ban on Russian energy.
The invasion of Ukraine has caused the stock market to fall 800 points.
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