By Alexander Miller, consultant in emerging market – Eurasia Business News, March 8, 2022
US President Joe Biden announced today a ban on US oil imports from Russia :
“Today I am announcing that the United States is targeting the main sectors of the Russian economy: we are banning any import of Russian oil, gas and energy. This means that Russian oil will no longer be received in American ports,” said the US President, speaking to reporters.
“This measure has received a lot of bipartisan support in Congress, and I hope from all the American people,” added Joe Biden.
Almost simultaneously, the United Kingdom announced the end of its imports of Russian energy by the end of 2022, through the voice of British Minister Kwasi Kwarteng.
Oil prices jumped on the news, with Benchmark Brent crude LCOc1 for May climbing by 5.4% to $129.91 a barrel by 13:45 GMT while WTI crude oil prices for April futures hit $ 123.99, gaining 3.84% in one day.
At the same time, the US president acknowledged that this move would drive up U.S. energy prices.
Earlier, the White House asked Democrats to not support the ban on energy imports from Russia, as this could lead to higher prices at gas stations and increase an inflation that breaks record every month since September 2021 (+7.5% in January 2022). The White House press secretary Jen Psaki confirmed that such as ban would have economic consequences and can “lead to an increase in gasoline prices for Americans.”
The authors of the bill voted by Congress proposed the US authorities to increase domestic production of oil and natural gas in order to “mitigate any price shocks caused by the embargo.”
The United States will give companies forty-five days to terminate Russian energy supply contracts, the White House said. The executive order prohibits any new U.S. investment in Russia’s energy sector and prevents Americans from financing foreign companies that invest in the sector. The impact of the measure on oil groups, such as the French oil company TotalEnergies, which have not withdrawn from Russia remains to be clarified. Many American companies such as Exxon had spontaneously withdrawn at the beginning of the conflict.
The impact of sanctions
We must admit that Western sanctions pressure on Russia has led to serious problems within the Western economies themselves. The sharp rise in oil and gas prices, problems with fertilizers and wheat, titanium and palladium caused enormous disproportions in the world economy. And if each specific one could still be solved, then together they become absolutely critical for Western economies.
We often hear that, U.S. sanctions will now be lifted from Iran and that the Iranian oil will replace Russian one. Everyone forgets that this will not happen “here and now”, but after some fairly long time, if it happens at all. And all this time it is necessary to live and maintain the standard of living of the U.S. an European populations with very high inflation. How will the U.S. and Europe deal with it?
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