US considers a ban on Russian oil imports as gas prices soar to highest since '08

The White House is negotiating with congressional leaders who are working on fast-tracking legislation banning Russian imports.

 A person uses a petrol pump at a gas station as fuel prices surged in Manhattan, New York City, US, March 7, 2022.  (photo credit: REUTERS/ANDREW KELLY)
A person uses a petrol pump at a gas station as fuel prices surged in Manhattan, New York City, US, March 7, 2022.
(photo credit: REUTERS/ANDREW KELLY)

WASHINGTON – The Biden administration is willing to move ahead with a ban on Russian oil imports into the United States without the participation of allies in Europe, two people familiar with the matter told Reuters, after Russia’s invasion of Ukraine.

President Joe Biden is expected to hold a video conference call with the leaders of France, Germany and the United Kingdom on Monday as his administration continues to seek their support for a ban on imports.

The White House is also negotiating with congressional leaders who are working on fast-tracking legislation banning Russian imports, a move that is forcing the administration to work on an expedited timeline, a source told Reuters.

A senior US official told Reuters that no final decision has been made but “it is likely just the US if it happens.”

Germany, the biggest buyer of Russian crude oil, has rejected plans to ban energy imports. Berlin is accelerating its plans to expand its use of alternative energy sources but cannot halt imports of Russian energy overnight, German Chancellor Olaf Scholz said on Monday.

 German Chancellor Olaf Scholz attends a meeting of the Federal security cabinet on the Ukraine crisis in Berlin, Germany, March 4, 2022. (credit: MICHAEL KAPPELER/POOL VIA REUTERS) German Chancellor Olaf Scholz attends a meeting of the Federal security cabinet on the Ukraine crisis in Berlin, Germany, March 4, 2022. (credit: MICHAEL KAPPELER/POOL VIA REUTERS)

A bipartisan group of US senators introduced a bill on Thursday to ban US imports of Russian oil. The bill is getting fast-tracked.

So far, it has stopped short of targeting Russia’s oil and gas exports as the Biden administration weighs the impacts on global oil markets and American energy prices.

Asked if the United States has ruled out banning Russian oil imports unilaterally, US Secretary of State Anthony Blinken on Sunday said: “I’m not going to rule out taking action one way or another, irrespective of what they do, but everything we’ve done, the approach starts with coordinating with allies and partners.”

At the same time, the White House did not deny that Biden might make a trip to Saudi Arabia as the United States seeks to get Riyadh to increase energy production. Axios reported that such a trip was a possibility.

“This is premature speculation and no trip is planned,” a White House official said.

“It is obvious that with petrol prices at the ‘pump’ approaching record highs, and with inflation already at uncomfortable levels, the administration is reluctant not only to sanction Russian oil and gas, but to stop importing the 650,000 Russian barrels of oil per day,” said Dov Zakheim, Senior Advisor at the Center for Strategic and International Studies (CSIS).

Zakheim, former undersecretary of defense during the George W. Bush administration, and former deputy undersecretary of defense for planning and resources during the Reagan administration, told The Jerusalem Post that inflation is already creating problems for Democratic prospects in the 2022 Congressional elections. “Higher oil prices would make matters worse,” he said. “The administration could open more Alaskan oil fields, but that would alienate the environmentalist element in the Democratic ‘base.’”

JOHN HANNAH, Jewish Institute for National Security of America (JINSA) senior fellow and former national security advisor to Vice President Dick Cheney, said it is clear that the Biden administration has been “acutely sensitive to any impact the Ukraine crisis might have on the already-raging rate of inflation – particularly when it comes to prices at the gas pump where American consumers most immediately come face-to-face with the skyrocketing cost of living.

“It’s been transparently obvious during the war’s first two weeks that the administration’s sanctions strategy was entirely premised on trying to carve out Russia’s current oil and gas sector as largely off limits so as to insulate the US economy as much as possible,” he continued. “It’s clear that they desperately hoped to avoid a further dramatic hike in energy costs that have unquestionably been a major factor in Biden’s sinking poll numbers over the past six months.

But as the death, destruction, and horrors of the war are flashed on American TV screens 24 hours a day, that position has rapidly become politically and morally unsustainable, he said.

“The thought that Americans and Europeans are indirectly helping to finance Putin’s war machine and that the blood of innocent Ukrainian women and children may be on their hands has quickly grown intolerable,” Hannah said. “Biden is no doubt in a conundrum. Voters hate the economic burdens placed on their families by out-of-control inflation.”

Richard Goldberg, Senior Advisor at the Foundation for Defense of Democracies (FDD), told the Post that the market is reacting to continued uncertainty and chaos, which he expected to continue regardless of a US decision on banning Russian oil imports.

“One policy option not yet discussed is to follow lessons learned from the Iran sanctions model, forcing payments for Russian energy into escrow accounts that cannot leave the purchasing country,” he said.

“President Biden also needs to send an unambiguous signal of support to American energy producers while repairing relations with Saudi Arabia. Asking the Saudis to pump more oil when Washington is on the verge of lifting terrorism and missile sanctions on Iran is rather absurd,” Goldberg said.

“Ultimately, though, the sooner the United States and its allies take bold action to deter further Russian aggression and compel Putin to end his war on Ukraine, the sooner the market can stabilize.”

OIL PRICES have soared to their highest levels since 2008 due to delays in the potential return of Iranian crude to global markets and as the United States and European allies consider banning Russian imports.

“The administration has been desperate for more than a year to conclude the Iran deal, but it’s almost certain the Ukraine crisis has added further incentive to get it done as soon as possible and hasten the day when millions of additional barrels of Iranian oil can make it on to global markets,” said Hannah.

According to Zakheim, “it is widely believed that with the Saudis not increasing oil production to alleviate the pressure on Western oil prices, there is greater urgency on the part of the administration to reach a deal that would allow Iranian oil to flow westward as quickly as possible.”

Eliott Abrams, senior fellow for Middle Eastern studies at the Council on Foreign Relations and former US deputy national security advisor, said that the Biden administration “is prioritizing the issue of inflation over national security matters.”

“It is seeking to get Venezuelan and Iranian oil on the market regardless of how that can bolster and enrich those regimes,” he said.

According to Goldberg, relaxing Iran oil sanctions won’t solve our oil market crisis – “it may actually backfire by further emboldening Putin, perceiving continued American weakness and exposing the reality that Russia is not a pariah.

“This deal was brokered by Russia, so we should expect the deal to benefit Russia, not the United States.”