US bans Russian oil imports over invasion of Ukraine
In a bid to tighten the grip on the Russian economy over the attack on Ukraine, US President Joe Biden has decided to impose a ban on imports of oil from Russia. The decision comes after Ukraine's President Volodymyr Zelensky had requested the US and Western countries several times to cut Russian imports. Notably, this is US' most far-reaching action yet to punish Moscow.
Why does this story matter?
The ban may come as a huge setback for Russia's economy as a major portion of its revenue comes from the oil and gas business. Russia is the world's second-largest oil exporter after Saudi Arabia and the largest producer of natural gas. More importantly, the ban is likely to turbo-charge already sky-high oil prices across the world and risk inflationary shock.
Decision taken in consultation with allies: Biden
"We're banning all imports of Russian oil and gas and energy. That means Russian oil will no longer be acceptable at US ports and the American people will deal another powerful blow to (President Vladimir) Putin," Biden said in an address from the White House. The decision was taken "in close consultation" with allies, he added.
European allies won't join US in oil imports ban
Notably, the US will not be joined by its European allies in the action as they are largely dependent on Russia for energy. However, European countries have also announced that they will reduce their dependence on Russia for energy needs.
"Oil import ban could be more powerful than SWIFT"
Earlier, in an address to the US Senate, Zelensky had said that cutting off oil and gas purchases from Russia could be "even more powerful than SWIFT." SWIFT is an international bank communication system from which some Russian banks have been banned. Significantly, despite the stringent sanctions imposed on Russia's financial sectors, it continues to have cash flow through energy exports.
Oil prices skyrocketed since Russian invasion of Ukraine
Oil prices have been rising for the past two weeks across the globe on fears of war and economic sanctions against Russia. The international benchmark--Brent crude--hit a high of $139.13 on Tuesday, the highest since July 2008. West Texas Intermediate crude futures, the United States oil benchmark, rose to $130.50 per barrel on Sunday evening--its highest since July 2008--before retreating.
BP, Shell halt procurement from Russia
Biden's announcement came hours after European oil giants BP and Shell announced they will not make any new purchases of Russian oil and gas. Meanwhile, Japanese officials also announced a ban on exports of oil refinery equipment to Russia, the Associated Press reported.
