London, (Parliament Politics Magazine) – Joe Biden has taken a brave decision to ban all imports of Russian oil in the United States which is not only going to be a heavy economic blow for Putin but will also have an impact on the economy worldwide.
Less than 10% of oil in the US comes from Russia, but it is still a huge risk to take for Biden as it will cause a rippling affect. Increasing sanction on Russia will increase oil prices in the US. Vehicle owners in the United States are already seeing higher prices for fuel and this will continue to rise, even though they have already risen by 70% at the beginning of the year.
Experts predict banning Russian oil could reach up to $200 per barrel, with the previous highest price previously reported being $147, so it’s a significant increase.
At this point it is difficult to tell if this decision on banning Russian oil imports will cause a divide in the coalition amongst Western leaders. The UK has shown Biden full support on the ban but has it will have a significant impact on European countries as well, with their reliance on Russian oil a lot higher, and gas at 40% it may cause a split. As affective as sanctions can be, there are economic consequences to consider.
German chancellor Olaf Scholz made his concerns about energy sources publicly clear just before Biden announced the ban, and the decision that he would not be supporting the ban himself in his country. Whilst the US have other oil reserves to turn to in this moment of crisis, not all countries in Europe have the same luxury.
Putin may respond to the ban by cutting off all Russian supplies to the West which will cause major disruptions worldwide to the global energy supply. At this point countries in the EU are preparing for alternative energy supplies with less reliance on Putin and fossil fuels, which may be a positive move towards cleaner energy. This will however involve a huge amount of money and increased inflation.
Former president Donald Trump has taken this opportunity to pounce on Biden following the Russian oil ban’s impact on increasing prices in the US asking, “DO YOU MISS ME YET?”
With oil prices continuing to rise we are likely to head towards a recession with longer lasting damage, with the economic recovery from the pandemic making it harder to self-correct. The impact of rising oil and fuel costs also have an indirect impact on the cost of food, so this is also likely to rise pushing up the cost of living for daily essentials.
Since the sanctions have been placed Putin was still able to obtain money from energy sales, this bank should have a heavier impact on Russia’s finances. However, Putin shows no sign of backing down with a plan to destroy the ‘anti-Russia’ narrative and says he will continue with the Ukrainian invasion.