On Tuesday, United States President Joe Biden announced an immediate ban on Russian oil and other energy imports.
Remarkably, it is a significant escalation in the international response to Moscow’s invasion of Ukraine.
The decision came after the strong support of American voters and lawmakers, targeting the main artery of the Russian economy.
Specifically, the White House said that the executive order prohibits Russian oil, liquefied natural gas, and coal imports.
American officials further stated that there would be no new contracts allowed. Consequently, the existing deals will phase out within 45 days.
The US imported about 672,000 barrels per day from Russia last year. The figures represented approximately 8.00% of the total American oil and refined products imports.
The majority of the country’s crude oil and petroleum imports come from Canada, Mexico, and Saudi Arabia.
In line with this, the US is far less dependent on Russian oil than many of its European allies.
However, the ban sent the crude oil prices to another surge on Tuesday. Eventually, oil pared its gain the following day but still hovered at its highest price since 2008.
The Brent crude contracts slashed 1.51% to $126.08 per barrel on Wednesday’s early trading.
Likewise, West Texas Intermediate oil futures declined 2.51% to $120.50 per barrel.
It came as Western-allied nations worked to slap severe deterrents on Russia for its unprovoked aggression.
Before the announcement of Biden, the United Kingdom stated its own restrictions on buying Russian oil imports.
The British government mentioned that it would phase out its imports by the end of the year.
In addition, the European Union unveiled a plan to halt the usage of Russian fossil fuels.
European Commission President Ursula von der Leyen said they could not rely on a supplier who explicitly threatened others.
US Bans Russian Oil; What’s next?
The decision of the US will likely push up oil costs in the country, resulting in higher prices at the pump.
Subsequently, energy experts warned that oil prices could go as high as $160.00 or even $200.00 per barrel. This possible upturn will send US gasoline prices to more than $5.00 per gallon.
Then, the most immediate effect on the world’s largest economy is mounting inflation. The US consumer price index posted at 7.50% in January, the highest over the last 40 years.
Investors now look forward to the release of the February data on Thursday. They expected the inflation figure to accelerate by 7.90%.
Still, analysts explained that the American government could afford the consequences of the given sanction. Biden has pledged to do all he could to ease the pain of the US citizens.