Crude oil prices surged on Tuesday as the US announced ban on Russian energy imports, while nickel prices rocketed to a record peak on Russian supply fears. US President Joe Biden imposed an immediate ban on oil in retaliation for the invasion of Ukraine and Britain said it would phase out imports through the end of 2022.
EU nations, which receive roughly 40 percent of their gas imports and one quarter of their oil from Russia, instead opted to set a goal of cutting their Russian gas imports by two-thirds. Meanwhile, Moscow warned earlier that in retaliation for sanctions imposed on it for the invasion, it could cut off natural gas supplies to Europe via the Nord Stream 1 pipeline.
While the United States imports less than 10 percent of its petroleum from Russian, analysts said the move was nevertheless important.
With the US move to ban Russian oil imports, News18 takes a look at its effect on price, its impact on America and the future ahead.
How Will Ban Impact Russia?
Amid rising gasoline prices in the US, the average price has topped $4 a gallon for the first time since 2008 the Biden administration faces growing pressure to impose further sanctions on Russia, including a ban on oil imports. No decision has yet been made.
For now, a broad US-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.
Even if a ban is enacted, 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 invasion, House Speaker Nancy Pelosi said.
Pelosi, who has expressed support for a US ban on Russian oil, nevertheless also cited Bidens action in leading US allies to release 60 million barrels of oil from strategic reserves, including 30 million barrels from US reserves, to try to stabilize global markets.
How Huge is Russia’s Exports?
Before its forces invaded Ukraine, Russia provided 1 out of every 10 barrels of oil the world consumed. But as the United States and other customers shun Russian crude, the global oil market faces its greatest upheaval since the Middle East tumult of the 1970s.
An energy price shock will probably last as long as the confrontation goes on, since there are few alternatives to quickly replace Russia’s exports of roughly 5 million barrels a day.
Oil prices were already rising as the world economy emerged from COVID-19 shutdowns and producers stretched to meet growing demand. International oil companies had cut back investment over the past two years.
Now traders are bidding up crude prices to levels not seen in years, expecting that Russia — one of the top three oil producers, along with the U.S. and Saudi Arabia — will be sidelined. With the announcement of the US embargo Tuesday, prices will probably climb higher, energy analysts say.
Effect on Oil Prices
A month ago, oil was selling for about $90 a barrel. Now, prices are surging past $120 a barrel as buyers shun Russian crude, with many refiners fearing that sanctions could be imposed in the future.
Energy analysts warn that prices could go as high to $160 or even $200 a barrel for crude oil if oil sanctions are imposed by the West or if buyers continue shunning Russian crude.
Oil prices that high could send an average gallon of US gasoline past $5 a gallon, a scenario that Biden and other political figures are desperate to avoid.
Fanning inflation flames
Commodity prices also felt the effects of the growing isolation of Russia. The London Metal Exchange suspended trade in nickel after the base metal spiked to a record $101,365 a tonne as Russian supply concerns sparked sharp volatility.
Nickel is used to make stainless steel and batteries for electric vehicles, and prices have risen from around $20,000 a tonne in January, putting huge pressure on manufacturers.
Gold rose as high as $2,069.25, a level unseen since August 2020.
The Ukraine crisis comes just as uncertainty was rising owing to surging prices caused by a spike in demand for oil, tight supplies and pandemic-induced supply chain snarls, among other things.
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