Western countries are squeezing the noose around the neck of Russia’s economy by way of sanctions. The latest is that US President Joe Biden has banned Russian oil and gas imports. In an address, Biden said with enthusiasm that the move was a “powerful blow” to “Putin’s war”. The UK also followed suit by saying it would stop importing Russian oil by the end of this year.
The US President, according to Sky News, vowed “to keep pressure mounting” on Vladimir Putin and his “war machine” over the invasion of Ukraine. “The US is targeting the main artery of Russia’s economy,” he said.
Mr Biden, according to the report, warned Americans that “defending freedom is going to cost” – with motorists in the world’s biggest economy, already gripped by a cost of living crisis, likely to face higher prices at petrol pumps.
Also, Britain’s plan “will give it nine months to switch to buying oil stocks from the US and Middle East, described by business secretary Kwasi Kwarteng as more than enough time for businesses and supply chains to adjust.”
The report has it further: “Oil prices, already at multi-year highs, climbed back above $132 a barrel as details of the latest sanctions emerged. The moves by London and Washington follow pleas by Ukraine’s leader Volodymyr Zelenskyy to stop the oil imports – which have so far been allowed to continue channelling money to Moscow even as other restrictions increase.
Crude and refined products from Russia accounted for about 8% of US liquid fuel imports last year, according to the Energy Information Administration, and the ban is likely to drive up consumer prices further – with inflation in the country currently running at a four-decade high.
In Britain, Mr Kwarteng said imports from Russia currently make up 8% of UK demand and urged businesses to “use this year to ensure a smooth transition so that consumers will not be affected”.
Mr Kwarteng noted that the market had already begun to “ostracise” Russian oil – even without sanctions – with nearly 70% of supplies unable to find a buyer.
He also said he was “exploring options” to end Britain’s use of natural gas from Russia, currently accounting for 4% of supply.
America, which had previously floated the idea of an oil ban over the weekend, is acting more swiftly than its allies – with European nations more dependent than the US on Russian energy supplies. Mr Biden said the US understood that countries in Europe “may not be in a position to join us”.
The Kremlin has warned of “catastrophic” consequences for consumers if the US and its allies ban Russian oil, with deputy prime minister Alexander Novak saying oil prices could hit $300 a barrel. Mr Novak also said it could stop the flow of gas through pipelines from Russia to Germany in response to Berlin’s decision last month to halt the opening of the controversial new Nord Stream 2 pipeline. European countries have said they plan to reduce their reliance on energy from Russia but this will take some time.
Natural gas from Russia accounts for one-third of Europe’s consumption of the fuel. The US does not import Russian natural gas.
On Monday, prime minister Boris Johnson said that “you can’t simply close down the use of oil and gas overnight even from Russia”.
Germany’s chancellor Olaf Scholz said an exemption for energy deliveries from sanctions was of “essential significance” for Europe’s day-to-day heating, transport, power supply and industry needs.”