US and UK ban Russian oil and gas imports in drive to punish Putin

Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of T&Cs and Copyright Policy. Email to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be  President Joe Biden has banned imports of Russian oil and gas into the US as Washington steps up economic sanctions on Moscow over the invasion of Ukraine in a bid to deprive it of revenue. The move was matched by a UK phase-out of Russian oil imports, but the EU did not follow suit and instead unveiled a plan to cut Russian gas imports by two-thirds within a year. The US decision opens a new front in efforts to isolate Russia from the global economy, following moves to impose sanctions on key Russian banks, top government officials and oligarchs, as well as its central bank. “Russian oil will no longer be acceptable at US ports and the American people will deal another powerful blow to [Vladimir] Putin’s war machine,” Biden said, speaking from the White House. But a ban on US and UK imports will be far less disruptive to global markets than a full international embargo as only a small proportion of Russian shipments goes to those two markets. The ban came after days of debate within the Biden administration and between the US and western allies about the merits of banning Russian energy to punish President Vladimir Putin for the attack on Ukraine, as well as the risk that it could trigger a new shock to global energy markets. Recommended Royal Dutch Shell PLC Shell to stop buying Russian oil and gas UK prime minister Boris Johnson’s government said it would phase out the import of Russian oil by the end of the year. Kwasi Kwarteng, UK business secretary, said the British government would organise an “orderly transition” away from Russian oil imports. But Rishi Sunak, UK chancellor, told a cabinet meeting that consumers would pay a price for the ban, with lower-income households particularly hard hit. The UK is less dependent on Russia than much of mainland Europe, with Russian supplies making up 8 per cent of overall oil imports into the UK. Johnson is expected to make a statement later this week on reducing British imports of Russian gas. Germany has so far resisted any EU prohibition on buying Russian crude. Olaf Scholz, Germany’s chancellor, said on Monday that he preferred to apply “sustainable” pressure on Moscow that would not impose too big a cost on German consumers. Developing alternatives to Russian energy, he said, “cannot be done overnight”. Biden said: “We’re moving forward this ban understanding that many of our European allies and partners may not be in a position to join us. But we’re working closely with Europe and our partners to develop a long-term strategy to reduce their dependence on Russian energy as well.” Volodymyr Zelensky, Ukraine’s president, tweeted on Tuesday evening: “Thankful for US and @POTUS personal leadership in striking in the heart of Putin’s war machine and banning oil, gas and coal from US market. Encourage other countries and leaders to follow”. Russia, the world’s largest exporter of crude and petroleum products, shipped almost 8mn barrels a day to global markets at the end of last year, according to the International Energy Agency. About 60 per cent of Russia’s oil exports go to Europe, including around 2 per cent to the UK, while 8 per cent go to the US. China accounts for about 20 per cent. Biden had been facing heavy pressure from members of Congress, both Republicans and Democrats, to plough ahead with an import ban on Russian oil, but had been resisting in an attempt to keep energy flowing around the world and prevent petrol prices from rising sharply at home. Biden warned that “defending freedom” would bring costs to America as well in the form of higher prices, but he told US energy companies to not take advantage of the increases. “Russia’s aggression is costing us all and is no time for profiteering or price gouging,” said Biden. The White House said Americans would also be prohibited from “financing or enabling foreign companies” that are investing in Russian energy production. A senior Biden administration official said the US was banning new crude purchases immediately and allowing 45 days to wind down existing contracts. Alexander Novak, Russia’s deputy prime minister, warned on Monday night that a potential ban could cause oil prices to more than double to $300 a barrel. He also said that Russia had the option of switching off gas supplies to Europe via the original Nord Stream pipeline, but had chosen not to so far because “no one will benefit from it”. Recommended LexShale Oil & Gas Oil embargo: US move obliges Wall Street to drop fracking capex curbs Premium The move earned plaudits for Biden from Capitol Hill. Jeanne Shaheen, a Democratic senator from New Hampshire, said it was the “right decision”. “The US vowed to hold Putin accountable for any violation of Ukraine’s sovereignty, and this is a result of Putin’s actions,” she said. Republicans said the move should be accompanied by moves to boost US domestic energy production. Brent crude oil rose 6.5 per cent on Tuesday to about $131 a barrel as traders reacted to news of the US ban. West Texas Intermediate, the US benchmark, rose by a similar margin to $127. US petrol prices have climbed rapidly in recent months. On Tuesday, the national average hit a record high of $4.17 a gallon, according to the AAA, an automobile association. Mohammed Barkindo, secretary-general of the Opec producer group, warned that there would be no way of filling the gap left by Russian oil in case of an all-out embargo. “There is no capacity in the world at the moment that can replace 7mn barrels of exports,” he said at the CERAWeek energy conference in Houston on Monday. Oil prices have surged in recent days as many big oil consumers have boycotted Russian oil even before the announcement of any official crude import prohibitions. Brent and West Texas Intermediate both ended 2021 at less than $80 a barrel. The EU unveiled a plan on Tuesday to cut Russian gas imports by two-thirds within a year. Moscow supplies 40 per cent of the bloc’s gas and a quarter of its crude oil. Brussels aims to import more liquefied natural gas, increase the amount of wind and solar energy, produce biogas and reduce demand by insulating homes and asking people to turn down their central heating.

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