Right now, following significantly tighter financial sanctions on Russia announced over the weekend, and an exodus of major oil companies from Russia, American crude traders and refiners have largely paused purchases of Russian oil and oil products. This is according to an assessment of shipping data and conversations with traders shared by Energy Intelligence and reported by Seeking Alpha.
These “self-sanctions” are not enough, says Ukraine's largest energy firm, whose CEO told the BBC the West should stop buying gas and oil from Russia.
Yuriy Vitrenko, who runs Naftogaz, said Russian sanctions should be stronger and targeted directly at energy.
To stop the war from spreading "it should make this very clear choice to get rid of this dependency on Russian gas and oil," he said.
With economic sanctions "you have to believe as if you were at war with Russia," he added.
Mr. Vitrenko is obviously right, but the United States is hardly on an economic war footing with Russia; at the current rate Biden is spending $20.4 Billion yearly on Russian oil while at the same time depleting our own strategic petroleum reserves, and by promising $10 billion in aid for Ukraine, the United States is, for all intents and purposes, financing both sides in the war.
Reports yesterday indicated that self-sanctioning reduced Russian crude oil exports by ~2.5mb/d; were the restrictions to persist, JPMorgan estimates oil prices would rise to $185 by year end. That was after Morgan Stanley wrote Tuesday that a geopolitical risk premium should be tacked onto current prices and called for $125 Brent in the bank's "bull case."
However, that’s not the highest predicted price. Famed oil trader Pierre Andurand recently tweeted that all-time high oil prices from 2008 would equate to ~$222/b today, when adjusted for inflation.
At a photo op in the Cabinet Room White House staff did their best to shield Biden from having to answer questions on Russian oil.
REPORTER: “Will you ban Russian oil?”
BIDEN STAFFER: “He said ‘no!' LET'S GO!”
REPORTERS: “No, he didn't." "He didn't respond to anything."
Unbelievably, yesterday, during the White House press briefing, White House Press Secretary Jen Psaki told a CNN reporter the United States would not stop importing or embargo Russian oil.
CNN Reporter: "Is the administration moving closer to banning Russian oil imports?"
Psaki says White House not supporting ban of Russian oil imports to US rather they are going to use this crisis to push Americans into "biofuels" and "electric cars" as an alternative option.
Domestic political consideration appears to be the only reason why the Biden administration refuses to embargo Russian oil as military expedience and a bipartisan group of Senators has demanded.
The Washington Examiner reports Sen. Joe Manchin (D-WV) called on President Joe Biden to ramp up domestic energy production to curtail the United States's reliance on Russian oil and gas imports, accusing the White House of pushing “hypocritical” policies.
The West Virginia Democrat said in a statement late Monday that the U.S. importing about a half-million barrels of oil products from Russia a month poses a “clear and present danger to U.S. national security."
And on Thursday, Senator Tom Cotton (R-AR) tweeted:
This afternoon I’ll ask the Senate to pass my bill to allow new oil and gas leases on federal land.
The choice between Russian energy and American energy shouldn’t be difficult. My bill would end support for Russia and lower the cost of gas.
And Florida Republican Representative Kat Cammack (FL-3) told NewsMax "We are literally funding the war in Ukraine on the Russian side by continuing to purchase Russian oil and it is a shame, it is unacceptable."
Indiana Republican Rep. Victoria Spartz (IN-5), who was born in Ukraine, was even blunter. On "Hannity," Spartz said energy security is a top issue for the United States and ties directly to the Russian invasion:
We have a lack of common sense in Europe, but we also have lack of common sense in our country, and it's created instability, bloodshed and a lot of problems. So we need to be smarter. And I think, you know, this president needs to understand if we want to tip the scale and make President Putin listen to us, the most effective way to do it is stop financing his war... And it's just a disgrace that we are doing that.
In December 2021, around 53% of the total price of regular gasoline was the price of crude oil. In the first week of February 2022, the average price of a gallon of regular gasoline was $3.44 (slightly up from $3.39 since late January). But with crude oil going up past $100 per barrel the price at the pump could quickly pass $5.00 per gallon.
On Thursday, Russia's second largest oil company, Lukoil, called for an end to the Russian invasion of Ukraine, stating that it was concerned by the "tragic events in Ukraine." Oil is Russia’s economic lifeblood, but Russian oil and gas exports are exempted from American sanctions.
Targeting Russian energy is the “most significant” tool left for the U.S. to deploy, Senator Lisa Murkowski said in an interview reported by POLITICO, and given President Vladimir Putin’s dependence on oil and gas revenues, it’s “the one that can do the most immediate damage to Russia in halting their efforts.”
“We are going to see price increases,” Murkowski said. “Nobody wants to see that. And this is going to hurt. But we all need to recognize Europe is in the midst of a war with Russia now. Innocent people are dying, children are dying. We have not been in as volatile as a situation as anytime in my life. And so we are looking right now from a very short window.”
“He [Putin] has used energy as a weapon and we are afraid to have it on the table? I’m sorry, he put it on the table. This is not going to be easy on Europe or the United States. Hopefully it will be most difficult on Russia,” Murkowski said.
Murkowski is partnering with her friend and frequent legislative partner Sen. Joe Manchin (D-W.Va.), who chairs the Energy and Natural Resources Committee, to introduce a bill that would ban the import of Russian crude oil and petroleum products into the U.S.
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