Oil surges as US announces ban on Russian oil imports

Oil surges as US announces ban on Russian oil imports
US President Joe Biden has announced a ban on Russian oil and other energy imports in retaliation for the invasion of Ukraine, underscoring strong bipartisan support for a move that he acknowledged would drive up US energy prices.
“We’re banning all imports of Russian oil and gas energy,” Mr Biden told reporters at the White House.
“That means Russian oil will no longer be acceptable in US ports and the American people will deal another powerful blow to (Russian President Vladimir) Putin’s war machine.”
Oil prices rose sharply following the news, with Benchmark Brent crude LCOc1 for May climbing by 5.4% to $129.91 a barrel.
Mr Biden has been working with allies in Europe, who are far more dependent on Russian oil, to isolate Russia’s energy-heavy economy and Putin.
The UK had announced shortly before Mr Biden’s remarks that it would phase out the import of Russian oil and oil products by the end of 2022.
Mr Biden said sanctions imposed by the United States and its allies had already caused the Russian economy to “crater”.
He said the latest moves had been made in close consultation with allies and partners around the world.
Earlier, the European Commission published a plan to make Europe “independent from Russian fossil fuels well before 2030”.
The import ban by Europe and the United States on Russian oil could send global oil prices spiralling up to $200 a barrel, analysts at Oslo-based consultancy Rystad Energy said.
Many buyers are already avoiding Russian oil so as not to become entangled in existing sanctions.
Shell said it would stop all spot purchases of Russian crude after drawing criticism for a purchase on 4 March.
Goldman Sachs raised its Brent forecast for 2022 to $135 from $98 and its 2023 outlook to $115 a barrel from $105, saying that the world economy could face the “largest energy supply shocks ever” because of Russia’s key role.
Danni Hewson, a financial analyst with AJ Bell, said it would take time to find alternative energy sources to Russian supplies.
“We know that there are discussions ongoing at the moment with OPEC countries. We know that there are discussions under way with Iran, Venezuela, Saudi Arabia to try to up the amount of oil and gas that is flowing into Europe.
“When it comes to gas particularly, we know that Europe is massively dependent on Russian supplies so the threat to cut off that Russian supply to Germany will just push those prices higher,” Ms Hewson said.
“What this is doing is stoking the debate about our energy security. What should we be looking at? How can we be investing? Can it just be in green technology or do we have to have some kind of bridge?
“Should we be looking at alternate gas and oil supplies and maybe do some more drilling?”