As geopolitical tensions rise, supply disruptions continue to push oil prices higher. In the face of surging energy costs, U.S. President Joe Biden on Tuesday announced a ban on Russian oil imports.
What To Know: Following Russia's invasion of Ukraine, the U.S. and its European allies discussed banning Russian oil imports in an attempt to stifle Russia's main revenue source. On Monday, the U.S. signaled a willingness to stand alone in banning imports, which added fuel to the move in oil prices.
Oil has climbed to 13-year highs amid increasing supply uncertainty. WTI crude was nearing $130 Tuesday morning, while Brent crude, the international benchmark, was hovering around $132.
Ukrainian leaders have been calling on the West to cut off Russian oil imports since the start of the invasion.
What Did The President Say? In an address Tuesday, Biden opened by saying: "Today, I am announcing the United States is targeting the main artery of Russia's economy. We're banning all imports of Russian oil and gas and energy."
Biden noted the main focus is to continue to put pressure on Russian President Vladamir Putin while keeping all NATO allies united, although many of the allied countries aren't in a position to join in banning imports because of their greater dependency on Russian energy.
"We are a net exporter of energy so we can take this step when others cannot, but we are working closely with Europe and our partners to develop a long-term strategy," Biden said.
Tom Siomades, CIO of AE Wealth Management, warned that banning oil without support from European allies will lead to even higher prices as the U.S. lacks alternative energy sources.
“Higher prices will increase inflation and eventually put us in recession," Siomades said. "We are still worrying about ideology and the environment, but the problem is we are swapping an economic/energy crisis for a perceived climate crisis, that’s what the markets are telling us and they do not like it.”
What's Next: Biden highlighted the more than $1 billion the U.S. has provided in security assistance for Ukraine and confirmed the country's commitment to continuing to work with European allies.
"The United States will share in the responsibility of caring for the refugees so the costs do not fall entirely on the European countries bordering Ukraine," Biden said.
The sanctions being enforced against Russia represent the most significant package of economic sanctions in history, according to the president.
Russia is already feeling the adverse effects. "One ruble is now worth less than one American penny," Biden stressed.
In addition to the existing sanctions, Biden plans to limit Russia's access to technological equipment vital to advancement and continue to put pressure on Russian oligarchs.
Biden acknowledged the rising gas prices in the U.S. and warned that prices will continue to rise as the U.S. strengthens its stand.
"With this action, it's going to go up further," Biden said: "I'm going to do everything I can to minimize Putin's price hike here at home."
Photo: jlhervàs from Flickr.
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