Ukraine war: US and Britain decide to ban Russian oil imports

President Joe Biden on a secure video call with French President Emmanuel Macron, German Chancellor Olaf Scholz and UK Prime Minister Boris Johnson. Photo / Adam Schultz, White House

The US and Britain are banning imports of Russian oil, the latest sanctions intended to punish Moscow for its invasion of Ukraine.

US President Joe Biden announced the country is "targeting the main artery of Russia's economy" by banning the imports.

"We will not be part of subsidising Putin's war," he said in the Roosevelt Room at the White House.

Britain is joining the United States in announcing a ban.

British Business Secretary Kwasi Kwarteng said oil and oil products from Russia would be phased out by the end of the year.

He said the transition period "will give the market, businesses and supply chains more than enough time to replace Russian imports," which account for 8 per cent of UK demand.

Kwarteng said the UK would work with its other oil suppliers, including the US, the Netherlands and the Gulf states, to secure extra supplies.

The bans followed pleas from Ukrainian President Volodymyr Zelenskyy to US and Western officials to cut off the imports, which had been a glaring omission in the massive sanctions put in place on Russia over the invasion.

Energy exports have kept a steady stream of cash flowing to Russia despite otherwise severe restrictions on its financial sector.

Biden's announcement came amid rising pressure from Democrats and Republicans, and reflected a willingness to accept the political risk of rising gas prices to economically retaliate against Russia.

"Defending freedom is going to cost," Biden said. "It's going to cost us as well in the United States."

Although Biden has tried to work with European allies, he acknowledged that many are not announcing a similar ban because they're more reliant on Moscow for oil and gas.

"So we can take this step when others can not," he said. "But we're working closely with Europe and our partners to develop a long-term strategy to reduce their dependence on Russian energy as well."

The European Union this week will commit to phasing out its reliance on Russia for energy needs as soon as possible, but filling the void without crippling EU economies will likely take some time.

Natural gas from Russia accounts for one-third of Europe's consumption of fossil fuel. The US does not import Russian natural gas.

Meanwhile, Biden's top intelligence official said the US believes Russia underestimated the strength of Ukraine's resistance before launching an invasion that has likely caused thousands of Russian casualties.

Director of national intelligence Avril Haines told a congressional panel that US officials believe Russian President Vladimir Putin feels "aggrieved" by Russia's failure to subdue Ukraine and that he perceives that he cannot afford to lose the war.

But what Putin might consider a victory could change given the escalating costs of the conflict to Russia, Haines said.

Despite Putin's announcement that he would raise Russia's alert level for nuclear weapons, Haines said the US has not observed unusual changes in Russia's nuclear force posture.

Haines said it is "unclear at this stage" whether Russia will try to conquer all of Ukraine, which would require more resources than Putin has committed.

In Ukraine itself, civilians in the besieged port of Mariupol are anxiously waiting for news of evacuation efforts as they struggle to survive in a city where bodies have been left uncollected on the streets.

Since Saturday, Russian and Ukrainian authorities have committed to setting up evacuation routes but efforts have repeatedly collapsed amid more fighting along the route. Another effort was made Tuesday.

With water supplies cut, people have been collecting water from streams or melting snow.

Power cuts mean that many residents have lost internet access and now rely on their car radios for information, picking up news from stations broadcast from areas controlled by Russian or Russian-backed separatist forces.

The International Committee for the Red Cross says it's not involved in any evacuation of civilians from two Ukrainian cities but is emphasising the strict rules under international law about the use of the red cross emblem in an armed conflict.

Videos have shown buses leaving northern Sumy and heading towards Mariupol in the southeast bearing a red cross on the side. It's not clear who put them there.

Zelenskyy said the International Red Cross was "forbidding the use of its emblem on our cars", without elaborating.

ICRC spokesman Ewan Watson said "we don't forbid per se".

"In armed conflict, [the red cross] may be used by medical staff and facilities, including army medics and vehicles. It may also be used by Red Cross and Red Crescent workers, vehicles, facilities and the humanitarian relief they bring," he said.

ICRC said it has no staffers in Sumy but has been working with Ukrainian and Russian authorities toward an agreement to help people leave Mariupol.

The US oil import ban

The issue of oil sanctions has created a conflict for the US president between political interests at home and efforts to impose costs on Russia. Though Russian oil makes up only a small part of US imports, Biden has said he was reluctant to ban it, cutting into supplies and pushing gasoline prices higher.

Inflation is at a 40-year peak, fuelled in large part by gas prices, and that could hurt Biden heading into the November midterm elections. He said two weeks ago that he wanted "to limit the pain the American people are feeling at the gas pump".

Gas prices have been rising for weeks because of the conflict and in anticipation of potential sanctions on the Russian energy sector. The average price for a gallon (3.8 litres) of gasoline in the US hit a record US$4.17 ($6.11) Tuesday, rising by 10 cents in one day, and up 55 cents since last week, according to auto club AAA.

Even before the US ban, many Western energy companies including ExxonMobil and BP moved to cut ties with Russia and limit imports. Shell, which bought a shipment of Russian oil this weekend, apologised for the move on Tuesday amid international criticism and pledged to halt further purchases of Russian energy supplies.

Preliminary data from the US Energy Department shows imports of Russian crude dropped to zero in the last week in February.

In 2021, the US imported roughly 245 million barrels of crude oil and petroleum products from Russia — a one-year increase of 24 per cent, according to the US Energy Information Administration.

"It's an important step to show Russia that energy is on the table," said Max Bergmann, a former State Department official who is now a senior fellow at the Democratic-leaning Center for American Progress.

Bergmann said it wasn't surprising that the US was able to take this step before European nations, which are more dependent on Russian energy.

"All of this is being done in coordination, even if the steps are not symmetrical," he said. "We are talking to them constantly."

The news of Biden's decision Tuesday was first reported by Bloomberg.

The White House announcement comes amid bipartisan pressure on Capitol Hill to ban Russian energy and impose other economic costs.

Last week, House Speaker Nancy Pelosi gave a big boost when she declared, "Ban it".

On Monday, Democrats on the powerful Ways & Means Committee posted, then removed, an announcement on a bipartisan bill to ban Russian oil imports and slap further trade sanctions on the country, according to an aide, because of pushback from the White House to acting before Biden had made his decision.

Pelosi told Democrats in a meeting early Tuesday that the House would go forward with a vote on legislation to ban the Russian oil imports, according to a person granted anonymity to discuss the private caucus meeting.

"The United States economy can fully handle any of the challenges associated with higher oil prices," Jason Furman, a Harvard professor and former top economic adviser to President Barack Obama. "But it will bring some challenges. We're going to have higher prices at the pump, and there's no way around that."

Before the invasion, Russian oil and gas made up more than a third of government revenues. Global energy prices have surged after the invasion and have continued to rise despite coordinated releases of strategic reserves, making Russian exports even more lucrative.

As a consequence of Russia's invasion of Ukraine, the US and international partners have sanctioned Russia's largest banks, its central bank, and finance ministry, and moved to block certain financial institutions from the Swift messaging system for international payments.

But the rules issued by the Treasury Department allow Russian energy transactions to keep going through non-sanctioned banks that are not based in the US in an effort to minimise any disruptions to the global energy markets.

Biden specifically highlighted those Russian energy carve-outs as a virtue because they would help to protect US families and businesses from higher prices.

"Our sanctions package we specifically designed to allow energy payments to continue," he said. Biden's actions were not expected to affect other nations' energy payments to Russia.

While Russian oil makes up a small amount of overall US energy imports, the US could replace Russian crude with imports from other oil-rich nations, but that could prove politically problematic.

Key US senators are warning the Biden administration from seeking any oil import deal from the Nicolas Maduro regime in Venezuela.

"The Biden administration's efforts to unify the entire world against a murderous tyrant in Moscow should not be undercut by propping up a dictator under investigation for crimes against humanity in Caracas," said Senator Bob Menendez, the chairman of the Foreign Relations Committee. "The democratic aspirations of the Venezuelan people, much like the resolve and courage of the people of Ukraine, are worth much more than a few thousand barrels of oil."