Explained: What does a US ban on Russian oil accomplish?

With Russia intensifying its war on Ukraine, killing civilians and triggering a mass refugee crisis, President Joe Biden on Tuesday announced a U.S. ban on imported Russian oil. Critics of Russia have said that sanctioning its energy exports would be the best — perhaps only — way to force Moscow to pull back.

A full embargo would be most effective if it included European allies, which are also desperate to stop the violence in Ukraine and the danger Moscow poses to the continent. Yet it’s far from clear that all of Europe would take part in an embargo, though Britain announced Tuesday that it would phase out Russian oil imports by year’s end.

Unlike the United States, Europe is deeply reliant on energy it imports from Russia, the world’s second-largest crude oil exporter behind Saudi Arabia. While the U.S. could replace the relatively small amount of fuel it receives from Moscow, Europe could not, at least not anytime soon.

What’s more, any curbs on Russian oil exports could send already skyrocketing oil and gasoline prices ever higher on both continents and further squeeze consumers, businesses, financial markets and the global economy.

Here is a deeper look:

What will happen with a US ban on Russian oil?

Amid rising gasoline prices in the U.S. — the average price reached a record $4.17 a gallon on Tuesday — the Biden administration has faced growing pressure to impose further sanctions on Russia, including a ban on oil imports.

For now, a broad U.S.-European ban appears elusive. On Monday, German Chancellor Olaf Scholz made clear that his country, Europe’s single-largest consumer of Russian energy, has no plans to join in any ban. In response, U.S. Deputy Secretary of State Wendy Sherman hinted that the U.S. could act alone or with a smaller group of allies.

“Not every country has done exactly the same thing,” Sherman said, “but we have all reached a threshold that is necessary to impose the severe costs that we have all agreed to.”

Even with a ban on Russian oil, the Biden administration and Congress “remain laser-focused on bringing down the higher energy costs for American families and our partners stemming from Putin’s attack,” House Speaker Nancy Pelosi said.

Pelosi, who has expressed support for a U.S. ban on Russian oil, nevertheless also cited Biden’s action in leading U.S. allies to release 60 million barrels of oil from strategic reserves, including 30 million barrels from U.S. reserves, to try to stabilize global markets.

Would a US-only ban on Russian oil hurt Moscow?

The impact on Russia would likely be minimal. The United States imports a small share of Russia’s oil exports and doesn’t buy any of its natural gas.

Last year, roughly 8% of U.S. imports of oil and petroleum products came from Russia. Together, the imports totaled the equivalent of 245 million barrels in 2021, which was roughly 672,000 barrels of oil and petroleum products a day. But imports of Russian oil have been declining rapidly as buyers shunned the fuel.

Because the amount of oil the U.S. imports from Russia is modest, Russia could potentially sell that oil elsewhere, perhaps in China or India. Still, it would probably have to sell it at a steep discount, because fewer and fewer buyers are accepting Russian oil.

If Russia were eventually shut off from the global market, rogue countries such as Iran and Venezuela might be “welcomed back” as sources of oil, said Claudio Galimberti, senior vice president of analysis at Rystad Energy. Such additional sources could, in turn, potentially stabilize prices.

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

“By eliminating some of the demand, we’re forcing the price of Russian oil down, and that does reduce revenue to Russia,” said Kevin Book, managing director at Clearview Energy Partners. “In theory, it is a way of reducing how much Russia earns on every barrel it sells, maybe not by a lot, but by some. The most important question is whether there’s going to be more pressure on the other side of the Atlantic.”

How could a Russian oil ban affect prices?

The news of the looming U.S. oil ban sent gasoline prices to their highest level ever recorded, with a gallon of regular selling for an average of $4.17 Tuesday.

A month ago, oil was selling for about $90 a barrel. Now, prices are surging around $130 a barrel as buyers shun Russian crude. Refiners had already feared being left with oil they couldn’t resell if sanctions were imposed.

Shell said Tuesday that it would stop buying Russian oil and natural gas and shut down its service stations, aviation fuels and other operations there, days after Ukraine’s foreign minister criticized the energy giant for continuing to buy Russian oil.

Energy analysts warn that prices could go as high to $160 or even $200 a barrel if buyers continue shunning Russian crude. That trend could send U.S. gasoline prices past $5 a gallon, a scenario that Biden and other political figures are desperate to avoid.

Are Russian imports already falling?

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

“Our industry has taken significant and meaningful steps to unwind relationships” with Russia and voluntarily limit Russian imports, said Frank Macchiarola, senior vice president of the American Petroleum Institute, the oil and gas industry’s largest lobbying group.

Preliminary data from the U.S. Energy Department shows imports of Russian crude dropped to zero in the last week in February.

While U.S. oil and gas producers could drill for more natural gas, its export facilities are already operating at capacity. Expanding those facilities would take years and billions of dollars.