President Joe Biden announced on March 8 that the United States is banning Russian oil imports, stopping about 500,000 barrels per day of new crude shipments from entering American seaports.
“Today I am announcing the United States is targeting the main artery of Russia’s economy. We’re banning all imports of Russian oil and gas and energy,” Biden told reporters at the White House. “That means Russian oil will no longer be acceptable at U.S. ports, and the American people will deal another powerful blow to Putin’s war machine.
“This is a step we’re taking to inflict further pain on Putin.”
The plan consists of prohibiting new purchases of Russian crude, liquefied natural gas, coal, and other petroleum products. It would also wind down deliveries of existing exports. The latest initiative will restrict new U.S. investment and prevent Americans from engaging in foreign investments where funds flow into Moscow’s energy sector.
“In taking this action, we consulted with European allies closely, but we do not expect them and did not ask them to join us,” a senior administration official revealed during a conference call with reporters on March 8.
The ban goes into effect immediately.
Biden’s decision came soon after the European Union confirmed that it would slash Russian gas imports by two-thirds by the end of 2022. The European Commission will search for other suppliers, while further requiring the bloc’s 27 states to ensure that gas inventories are 90 percent full by Oct. 1 every year.
The eurozone currently imports roughly 45 percent of its gas from Moscow, buying an estimated 2.5 million barrels per day.
British Prime Minister Boris Johnson is expected to outline a long-term energy strategy that includes prohibiting imports of Russian energy. Although the UK is less dependent on Russian energy than the EU, it still purchases $5.3 billion worth of crude per year.
It’s a lot easier for the United States to switch off the taps from Russia than it would be for Europe, says Rob Thummel, portfolio manager and managing director at Tortoise.
“There will need [to be a] coordinated effort including higher production volumes from Canada and the U.S. to help Europe offset Russian imports,” Thummel told The Epoch Times. “Nearing the end of winter will buy some time to rearrange the deck chairs before next winter’s heating season in Europe begins.”
But the Kremlin has warned that “a rejection of Russian oil would lead to catastrophic consequences for the global market,” with Deputy Prime Minister Alexander Novak predicting that prices could surge to $300.
Soon after the news of Biden’s measure, West Texas Intermediate (WTI) crude surged to $130 a barrel before easing to around $125 at the midday mark on March 8.
Cheers, Jeers on the Biden Announcement
Republican lawmakers celebrated the news, but were cautious about turning to other foreign suppliers.
“Now we have to do part two, which is we should replace it with American oil, not Saudi oil, not Iranian oil, not Venezuelan oil,” Sen. Marco Rubio (R-Fla.) said in a video.
“We don’t need oil from Iran. We don’t need oil from Venezuela. In fact, Venezuela can’t even produce enough oil. At this moment, they’re less than 1 percent of the global production.”
In recent days, it’s been reported that the Biden administration is in talks with Saudi Arabia and Venezuela as part of its efforts to contain soaring energy prices. In addition, the White House has been in active negotiations to create a nuclear agreement with Iran, something that could result in lifting sanctions and allowing Tehran to inject millions of barrels of oil into global energy markets.
Riyadh, the capital of Saudi Arabia, projected that the world needs 2 million barrels per day of spare capacity to absorb oil supply shocks.
Amin Nasser, CEO of oil giant Saudi Aramco, revealed at CERAWeek in Houston that his company plans to deliver 2 million additional barrels to the market to ease upcoming shocks.
Meanwhile, Martin Durbin, president of the U.S. Chamber of Commerce’s Global Energy Institute, lauded the news and urged greater domestic output.
“We applaud the administration for banning Russian energy imports,” Durbin said in a statement. “It’s time now for the administration to partner with domestic energy producers to leverage America’s ability to produce more oil and gas and focus on pro-growth policies to benefit our economy and the world’s security.”
The American Petroleum Institute (API) also supports the U.S. government’s decision, confirming that it’s ready to comply with the import ban.
“The industry has already taken significant and meaningful steps to unwind relationships, both with respect to assets in Russia as well as imports of Russian crude oil and refined products,” said Mike Sommers, API’s president and CEO. “We share the goal of reducing reliance on foreign energy sources and urge policymakers to advance American energy leadership and expand domestic production to counter Russia’s influence in global energy markets.”
Biden told the press that “it’s simply not true that my administration or policies are holding back domestic energy production,” reiterating comments from White House press secretary Jen Psaki.
Kathleen Sgamma, president of Western Energy Alliance, disagrees with these remarks.
Sgamma said she’s “glad” that Biden is “finally willing to sanction Russia as much as he’s been ‘sanctioning’ American oil and natural gas producers.”
“American producers stand ready to increase production if the administration could back off its misguided climate change policies and remove the red tape and obstacles to American production,” she told The Epoch Times in an email. “The president is so wedded to policies that hamstring oil and natural gas in America that he can’t bring himself to do the things in his power right now to unleash American production.”
Sgamma said the president could deem all outstanding leases and permits, including pipeline rights of way, as ready to go. She also said he could request financial regulatory bodies to halt preventing credit and capital from flowing to new production. Biden could additionally cease new rulemaking mechanisms that possess the goal of decreasing U.S. output.
“The left screams back that more renewables are needed, but if that were the answer, Germany would not be more vulnerable to Russian energy than before,” she said.
“Germany has done what the left is demanding we do now, having spent two decades and hundreds of billions of dollars on wind and solar. Because Germans need to actually heat their homes and turn on the lights, they’re now more reliant on Russia because wind and solar don’t provide 24/7 electricity and transportation.”
Biden referenced the 9,000 permits that could allow companies to drill now, but this figure has been a source of contention for energy leaders.
In a previous commentary, Sgamma highlighted the myriad of legal, financial, and regulatory challenges that have burdened the industry, making the 9,000 permits statistic misleading.
Many leases face litigation issues by environmental organizations, while a substantial number of other leases still need to wait for additional government approvals amid federal environmental analysis. The other problem is that gathering enough capital for these projects is difficult since activist investors, emboldened by the White House’s regulatory tools, have refrained from pouring funds into the fossil fuel sector, she says.
John Hess, CEO of Hess Corp., told CNBC that he thinks the United States and other countries need to do more to stabilize a market that is “now in the intensive care unit.”
Emel Akan contributed to this report.