EXPLANATION: What would happen if the United States banned Russian oil?

WASHINGTON

As Russia has escalated its war against Ukraine, killing civilians and triggering a massive refugee crisis, some US officials across the political spectrum have called for a ban on Russian fuel imports. Such a ban, they say, would be the best — perhaps the only — way to force Moscow out.

A total embargo would be more effective if it included European allies, who are desperate to end the violence in Ukraine and the danger Moscow poses to the continent. However, it is far from certain that Europe would participate in a total embargo.

Unlike the United States, Europe is highly dependent on the energy it imports from Russia. While the United States could replace the relatively small amount of fuel it receives from Moscow, Europe could not, at least not anytime soon.

Moreover, any restrictions on Russian oil exports would send already skyrocketing oil and gasoline prices on both continents skyrocketing and further strain consumers, businesses, financial markets and the global economy.

Here’s a more in-depth look:

IS THERE A RUSSIAN OIL BAN?

Amid rising US gasoline prices — the average price topped $4 a gallon for the first time since 2008 — the Biden administration faces growing pressure to impose new sanctions on Russia , including a ban on oil imports. No decision has yet been made.

For now, a broad US-EU ban seems elusive. On Monday, German Chancellor Olaf Scholz made it clear that his country, the biggest consumer of Russian energy in Europe, was not considering joining any ban. In response, US Under Secretary of State Wendy Sherman hinted that the United States could act alone or with a small group of allies.

“We haven’t been completely identical on every penalty,” Sherman said. “Not all countries have done exactly the same thing, but we have all reached a necessary threshold to impose the severe costs that we all agreed on.”

Although U.S. Secretary of State Antony Blinken raised the possibility of a Russian oil import ban, Sherman noted, “he also said we need to maintain a supply of oil,” possibly by d other means to stabilize prices.

Even if a ban is enacted, the Biden administration and Congress “remain focused on reducing the higher energy costs for American families and our partners resulting from Putin’s invasion,” House Speaker Nancy said. Pelosi.

Pelosi, who expressed support for a U.S. ban on Russian oil, nonetheless also cited Biden’s action in getting U.S. allies to release 60 million barrels of oil from strategic reserves, including 30 million barrels from U.S. reserves, in an attempt to stabilize world markets.

WHAT IF THE US ACTS ALONE?

If the United States alone banned imports of Russian oil and refined products, the impact on Moscow would likely be minimal. The United States imports a small share of Russia’s oil exports and does not buy any natural gas from Moscow.

The United States imports about 100,000 barrels a day from Russia, or only about 5% of Russia’s crude oil exports, according to Rystad Energy. Last year, about 8% of US imports of petroleum and petroleum products came from Russia.

The United States could replace Russian crude with imports from Saudi Arabia and the United Arab Emirates. For its part, Russia could find other buyers for this fuel, perhaps in China or India. Such a step would “introduce massive inefficiency into the market,” driving up prices, said Claudio Galimberti, senior vice president of analytics at Rystad Energy.

Yet if Russia were cut off from the world market, Galimberti said, rogue countries such as Iran and Venezuela could be “welcomed” as sources of oil. These additional sources could, in turn, potentially stabilize prices.

A team of Biden administration officials was in Venezuela over the weekend to discuss energy and other issues, White House press secretary Jen Psaki said. Officials discussed “a range of issues, certainly including energy security,” Psaki said.

HOW COULD A RUSSIAN OIL BAN AFFECT PRICES?

A month ago, oil was selling for around $90 a barrel. Today, prices are above $120 a barrel as buyers shun Russian crude, with many refiners fearing sanctions could be imposed in the future. They fear ending up with oil that they could not resell as gasoline if sanctions were imposed in the near future.

Shell said on Tuesday it would stop buying Russian oil and natural gas and close its gas stations, aviation fuels and other operations there, days after Ukraine’s Minister of Foreign Affairs criticized the energy giant for continuing to buy Russian oil.

Energy analysts warn that prices could soar as high as $160 or even $200 a barrel of crude oil if oil sanctions are imposed by the West or if buyers continue to shun Russian crude.

Oil prices that high could send an average gallon of U.S. gasoline over $5 a gallon, a scenario Biden and other politicians are desperate to avoid.

ARE RUSSIAN IMPORTS ALREADY DOWN?

The U.S. oil industry has said it shares the goal of reducing dependence on foreign energy sources and is committed to working with the Biden administration and Congress. Even without sanctions, some US refiners have broken contracts with Russian companies. Imports of crude oil and Russian products fell.

“Our industry has taken important and meaningful steps to untie relations” with Russia and voluntarily limit Russian imports, said Frank Macchiarola, senior vice president of the American Petroleum Institute, the country’s largest lobby group. oil and gas industry.

Preliminary data from the US Department of Energy shows Russian crude imports fell to zero in the last week of February.

The Petroleum Institute has not taken a formal position on the legislation to ban imports of Russian oil. But he says he would comply with any restrictions imposed.

WILL EUROPE GO FORWARD?

A ban on Russian oil and natural gas would be painful for Europe. Russia supplies about 40% of Europe’s natural gas for domestic heating, electricity and industry and about a quarter of Europe’s oil. European officials are looking for ways to reduce their dependence, but it will take time.

Russian Deputy Prime Minister Alexander Novak underscored the urgency, saying Russia would have “every right” to stop natural gas shipments to Europe through the Nord Stream 1 pipeline in retaliation for Germany’s shut down the parallel Nord Stream 2 gas pipeline, which was not yet operational. He added that “we didn’t make that decision” and that “no one would benefit from it”. This was a change from earlier Russian assurances that they had no intention of cutting off gas to Europe.

Oil is easier to replace than natural gas. Other countries could increase their oil production and ship it to Europe. But a large amount of oil would have to be replaced, which would push prices up even more as the oil would likely have to travel farther.

Substituting the natural gas that Russia supplies to Europe is probably impossible in the short term. Most of the natural gas that Russia supplies to Europe passes through gas pipelines. To replace it, Europe would mainly import liquefied natural gas, called LNG. The continent does not have enough pipelines to distribute gas from coastal import facilities to more distant parts of the continent.

In January, two-thirds of US LNG exports were destined for Europe. According to S&P Global Platts, some ships loaded with LNG were heading for Asia but turned back to Europe because buyers there offered to pay higher prices.

While U.S. oil and gas producers may be drilling for more natural gas, its export facilities are already operating at full capacity. Expanding these facilities would take years and billions of dollars.

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Bussewitz reported from New York. AP writer Aamer Madhani contributed to this report.