Biden bans Russian oil as Shell leaves the country

By Raffaele Redi
• Updated

The US will stop buying Russian oil by the end of 2022 while Europe will reduce imports

A residential building in Ukraine damaged by Russian aircraft                                 
US president Joe Biden praised Ukrainians for fighting for freedom - Photo: Shutterstock

Royal Dutch Shell joined the anti-Russia consensus as US president Joe Biden said America will ban the importation of Russian oil into the US by the end of the year.

The European Oil giant said it is withdrawing from Russia after backlash hit the company over the purchase of Russian oil. Shell will also immediately stop buying Russian crude oil on the spot market while not renewing term contracts and, at the same time, shutting its service stations in the country.

The echoes of the new restrictions to punish the Kremlin immediately resonated at Brussels, where the president of the European Commission, Ursula Von der Leyen, announced that Europe is ready to reduce by at least two-thirds its demand for Russian oil before the end of 2022, as Europe is “too dependent on Russian fossil-fuels.”

On the market, the news brought the price of the oil up by around 7% with the Brent reaching the $131.30 level while WTI Crude Oil touched $128 per barrel. At the same time, the price of gold per ounce breached the $2,000 resistance and touched a record high.

Sales were hitting US stocks while European stocks were about to close on the green side of the chart. Sales also hit major cryptos, such as bitcoin (BTC) and Ether (ETH) which were on the green side at midday.

Biden's speech

In a brief, live-streamed conference, the President of the United States, Joe Biden, said: “Russian oil won’t be accepted in America, as the US is supporting the Ukrainian people.

The decision to ban Russian oil, according to Biden, was taken in consultation with European and NATO partners. However, “as the US produces far more than all European combined, we can take this step while others cannot,” said Biden.

“We remain united to keep pressure on Putin and this will have costs for American people as well, but we must do this,” he added.

The president underlined that NATO is responding to “Russian escalating violence and aggression with the most significant package of sanctions ever.”

In 2020, Russia was the world’s third-largest producer of petroleum and other liquids, after the United States and Saudi Arabia. Europe is Russia’s main market for its oil and natural gas exports, according to US Energy Information Administration (EIA).

Only about 1% of Russia’s total crude exports – around 5 million barrels – in 2020 went to the United States, while 48% went to Europe and 42% to Asia and Oceania with China being the largest importing country of Russia’s crude oil and condensate, at 31%.

Oil reserves released

Meanwhile, the US Department of Energy said it is committed to releasing 30 million barrels of crude oil from the US Strategic Petroleum Reserve (SPR) to ensure an adequate supply of petroleum in response to Russia’s further invasion of Ukraine.

The SPR release is part of a coordinated effort among the 31 members of the International Energy Agency (IEA).

Other IEA member countries collectively agreed to release an additional 30 million barrels of petroleum from their emergency reserves, bringing the total release to 60 million barrels.

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