U.S. bans Russian oil, LNG, and coal imports while UK moves to phase out Russian oil imports

U.S. President Joe Biden has banned the imports of Russian oil, liquefied natural gas, and coal while the UK government has decided to phase out Russian oil imports in response to Russia’s attack on Ukraine and in an effort to reduce and end their reliance on Russian fossil fuels.

Finding that the Russian “unjustified, unprovoked, unyielding, and unconscionable war against Ukraine” constitutes an unusual and extraordinary threat to the national security and foreign policy of the United States, Biden issued an executive order on Tuesday prohibiting the importation into the United States of products of Russian origin, including crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products.

According to the information from the government, the U.S. last year imported nearly 700,000 barrels per day of crude oil and refined petroleum products from Russia.

Furthermore, the order bans all new investment in the energy sector in Russia by a United States person, wherever located; and any approval, financing, facilitation, or guarantee by a United States person of a transaction by a foreign person where the transaction by that foreign person would be prohibited by this section if performed by a United States person or within the United States.

Americans will also be prohibited from financing or enabling foreign companies that are making investments to produce energy in Russia.

It is worth reminding that, in an effort to stabilise the energy markets, the U.S. and the International Energy Agency (IEA) member countries last week agreed to a collective release of an initial 60 million barrels of crude oil from our strategic petroleum reserves, with the United States committing half of that in the emergency sale.

This announcement on banning Russian oil builds on unprecedented economic costs the United States and its allies and partners have imposed on Russia since the beginning of the attack on Ukraine.

U.S. oil and gas production is approaching record highs. The Biden Administration has been clear that, in the short-term, supply must keep up with demand, at home and around the world while the world makes the shift to a secure clean energy future.

According to the government, natural gas production has never been higher, and crude oil production is expected to hit a new high next year. Oil and gas companies, and the finance firms that back them, should not use Putin’s war as an excuse for excess price increases or padding profits, and, as major energy company leaders have themselves said, they have the resources and incentives they need to further increase production in the United States, the White House said.

The White House also said that, in the long run, the way to avoid high gas prices is to speed up – not slow down – the transition to a clean energy future.

“We cannot drill our way out of dependence on a global commodity controlled in part by foreign nations and their leaders, including Putin. The only way to eliminate Putin’s and every other producing country’s ability to use oil as an economic weapon, is to reduce our dependency on oil,” the statement from the government said.

The U.S. government emphasised that this crisis reinforced its resolve to make America truly energy independent, which means reducing dependence on fossil fuels. As stated, this is a shared goal with European allies, that they will work together to achieve.

Meanwhile, the UK government and its Business Secretary, Kwasi Kwarteng, revealed on Tuesday that the UK would “phase out imports of Russian oil in response to Vladimir Putin’s illegal invasion of Ukraine by the end of the year.”

However, the phasing out of imports will not be immediate, but instead allows the UK more than enough time to adjust supply chains, supporting industry and consumers. The government will work with companies through a new Taskforce on Oil to support them to make use of this period in finding alternative supplies.

As detailed by the UK government, the import of Russian oil makes up 44 per cent of Russian exports and 17 per cent of federal government revenue through taxation so this move steps up the international pressure on Russia’s economy.

Furthermore, Russian imports account for 8 per cent of total UK oil demand, but the UK is also a significant producer of both crude oil and petroleum products, in addition to imports from a diverse range of reliable suppliers beyond Russia including the Netherlands, Saudi Arabia, and the USA.

Business and Energy Secretary Kwasi Kwarteng said: “We have more than enough time for the market and our supply chains to adjust to these essential changes. Businesses should use this year to ensure a smooth transition so that consumers will not be affected.”

The elimination of oil imports is in addition to existing trade, financial, and personal sanctions already imposed by the UK against Putin’s regime and those who support him in his war against Ukraine.

On 1 March Russian ships were banned from UK ports and authorities were granted new powers to detain Russian vessels.

The Prime Minister confirmed that the government will set out an energy strategy to set out the UK’s long term plans for greater energy security, including both renewable and domestic oil and gas supplies.

Quoting transport minister, Grant Shapps, Reuters reported on Wednesday that, following the UK’s decision to phase out Russian oil imports, the country will step up its production of oil and gas.