The US is expected to impose ban on Russian oil imports as it ramps up sanctions following the country’s invasion of Ukraine.
Plans to target Russian oil were confirmed by US Democratic Senator Chris Coons in an interview with CNN, who revealed the ban could come in place as soon as today or tomorrow.
The White House later confirmed US President Joe Biden would make a sanctions announcement later today.
Measures could include immediate restrictions on Russian oil products alongside winding down orders for existing contracts.
US investors and companies might also be banned from investing in Russias energy sector.
The developments are not a complete surprise, as Secretary of State Anthony Blinken revealed on Sunday that the US was weighing up sanctions on Russia.
So far, the West has excluded energy exports from international measures – instead targeting the central bank, financial institutions and the assets of dozens of Kremlin-linked oligarchs.
Russia is the world’s biggest exporter of oil and natural gas, with the European Union (EU) reliant on the country for 40 per cent of its natural gas and 30 per cent of its oil imports.
However, the US is not a leading buyer of Russian oil – while European leaders including Prime Minister Boris Johnson, Dutch premier Mark Rutte and German Chancellor Olaf Scholz have all played down the prospect of cutting off Russian oil and gas.
Earlier today, Russian Deputy Prime Minister Alexander Novak warned Russia could cut off gas supplies if it faced Western sanctions on oil.
He also cautioned that prices for oil could spike to $300 per barrel – with Brent Crude currently trading at around $130.
Energy analysts have warned Europe would suffer from any import bans – and would struggle to make up the shortfall in supplies, with UBS suggesting drastic contingency measures including vastly reducing consumption needs would be necessary.
However, Goldman Sachs suggested a US-only move would have negligible effects on crude supplies and noted that the US only imports around 400,000 barrels per day – even if the geopolitical manoeuvres would boost current benchmark rallies,
It said: “Volumes this small are well within the market’s ability to redirect flows and as such we would expect minimal overall impact on crude fundamentals.”
Markets were tight prior to Russia’s invasion of Ukraine following a boost in post-pandemic demand and OPEC+ consistently missing raised production targets.
The US has been looking for new partners to mitigate the effect of losing Russian oil supplies, and has even held talks with Venezuela, raising the possibility of lifting sanctions on Maduro’s government.
However, it is understood the talks have so far failed to progress to any meaningful conclusions.
Meanwhile, Shell has announced its withdrawal from Russia – outlining that it would no longer buy any Russian oil or gas.
It also apologised for buying a Russian crude shipment last week.