The United States became the first country in the world to announce sanctions against the Russian energy sector.
Amid the strong attack led by Vladimir Putin on Ukraine, President Joe Biden announced Tuesday that imports of oil, natural gas and coal will be completely and immediately prohibited on US soil.
Although Washington’s decision is an important signal for the Kremlin (and, by the way, for the rest of the Western countries), it does not represent a dramatic change with respect to the energy supply that the North American country currently receives.
And it doesn’t represent too much of a blow to Russian exports either.
And it is that, despite the fact that Russia is one of the largest oil producers in the world, it does not send much to the United States, neither crude nor refined.
According to the US Energy Information Administration (EIA), US imports from Moscow in 2021 constituted a small portion of its energy consumption, barely 8% (about 700 thousand barrels per day). ).
Of this amount, only 3% corresponds to crude oil.
The scenario is very different if we think of the European Union, where 30% of its oil comes from Russia, and there are no easy substitutes if supply is interrupted.
“The United States produces much more oil domestically than all European countries combined. In fact, we are a net exporter of energy. That is why we can take this step when others cannot,” Biden said at the time of announcing the new sanctions.
Thus, many experts see the US decision as a “symbolic gesture” rather than a real headache for Russian exports.
The US suspension of its imports of Russian oil and gas means that:
- New contracts to buy Russian crude oil and certain petroleum products, liquefied natural gas (LNG), and coal are immediately prohibited.
- Existing contracts must be settled within 45 days.
- US companies and investors are prohibited from seeking investment in Russia’s energy sector.
- Americans are also not allowed to participate in foreign investments in Russian energy.
natural gas and coal
Regarding natural gas , the import ban affects even less than in the case of oil. This, because the Americans do not import it from Russia.
According to the EIA, most of the natural gas consumed in the country is produced there. And what little is imported—particularly in the winter months, to help meet strong domestic demand—is mostly from Canada (98%).
“The United States does not need gas from Russia because it has its own base,” Jaime Concha , editor of Energy Intelligence, a company that analyzes the world’s energy sector , explains to BBC Mundo .
The same happens with coal, adds Concha.
“The US is one of the largest coal producers in the world. So this ban doesn’t affect it much in that area either,” he says.
Again, the case is very different in the European Union (EU), especially when it comes to natural gas. Together, the countries that make up the bloc import more than 40% from Russia. Germany and Italy are the nations that most depend on Moscow for this.
“Russia’s importance as a gas supplier in Europe is enormous. And that is why European countries have been hesitating about imposing sanctions on natural gas flows,” says Concha.
“Those volumes would have to be replaced. If they are not, the domino effect would be quite strong. Not only in electricity generation, but also in industrial production in Europe, where it is used as a raw material,” he adds.
The EU is looking for ways to end its dependence on Moscow. On Tuesday they said they plan to cut Russian gas imports by two-thirds by the end of this year and cut their dependence on it permanently by 2030.
For its part, the UK also announced that it will phase out “the import of Russian oil and oil products by the end of 2022”.
“This transition will give the market, businesses and supply chains more than enough time to replace Russian imports, which account for 8% of UK demand,” British Business and Energy Secretary Kwasi said on Twitter. Kwarteng.
Increase in the price of oil
Despite the fact that the real dependence of the United States on the Russian energy sector is not too important, the ban announced by Biden still generates repercussions on its economy.
Putin’s invasion of Ukraine has raised the price of oil to its highest levels since 2008. And following the US president’s remarks, it hit $139 a barrel.
“In terms of volumes, the impact of the ban is little. But as a symbolic message, it is quite important. And the market reacted. The uncertainty due to the conflict and its consequences means that the prices of refined oil products, such as gasoline, be more expensive this year, which will have consequences”, explains Jaime Concha.
As Biden himself noted, “Putin’s war is already hurting American families at the gas pump.”
“Since Putin began his military build-up on the border with Ukraine, just since then, the price of gasoline in the United States has risen 75 cents. With this action it will rise even more,” the president added.
On the other hand, Jaime Concha affirms that Biden’s message “is a symbolic indication to American companies to leave Russia, to stop investing there and to stop supporting the Russian market with technology and other forms.”
Although even before Biden’s announcement, some US companies had already said they would stop buying oil from Moscow.
This is the case of Par Pacific Holdings . The Houston-based refiner publicly announced the end of its business with Russia on Thursday, March 3.
Could the US import oil from Latin America?
One of the options that the United States is considering to replace Russian oil imports is to go to Latin American countries.
In fact, a few days ago, representatives of the United States and Venezuela held a meeting (the first since Washington broke relations with Caracas in 2019) and there has been speculation that they could reach an agreement on the matter.
Reinaldo Quintero , president of the association that represents Venezuelan oil companies, told the BBC that the country could potentially raise its production levels by 400,000 barrels a day.
“That will allow us to satisfy the need, part of the need, of the North American market,” he said.
Other oil-producing countries such as Ecuador and Colombia could also come into play.
“The quality of Russian oil is similar to the oil that comes from Latin America, therefore the United States is expected to replace the few barrels of oil that were bought from Russia with crude from Ecuador or Colombia,” says Concha.
- BBC News World