The US has banned Russian oil imports and Britain will phase them out by the end of the year as the prime minister said “the noose is tightening” on Vladimir Putin’s regime.
US President Joe Biden said America’s latest move to punish Mr Putin over his invasion of Ukraine – which will also stop gas imports – targeted the “main artery of Russia’s economy”.
But he warned that “defending freedom is going to cost” – and oil prices pushed above $133 a barrel on the latest developments, signalling more pain ahead in the coming months for fuel users on both sides of the Atlantic.
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The average price of US fuel hit new record levels on Tuesday in the wake of the announcements.
In Britain, the main impact is likely to be felt by buyers of diesel, where Russia meets 18% of the country’s needs. UK fuel prices are already also at all-time highs.
Key developments:
• Ukraine claims senior Russian general has been killed in fighting near Kharkiv
• Zelenskyy accuses Russia of violating earlier humanitarian corridors
• Russia has warned it could cut its gas supplies to the West through the Nord Stream 1 pipeline
• Talks between Ukraine and Russia held in Belarus
• New laws to help target Russian oligarchs pass Commons
Boris Johnson said the latest sanctions would add to the “extreme” pressure on Russia, already being battered by a plunge in the rouble to record lows.
Major Russian banks have been blocked from the SWIFT messaging system that enables global payments and billions in assets held by its central bank have been frozen, while multinational businesses from BP and Shell to Visa and Mastercard have shut up shop or announced plans to exit the country.
Mr Johnson said Britain “can’t move overnight” to end oil imports but insisted “this is a big step that the world is taking” with European nations also now preparing to reduce their dependence on Russian energy despite their reliance on it.
“The level of disgust and outrage at what is happening in Ukraine is mounting around the world and the noose is tightening on the Putin regime,” he said.
Britain’s plan will give firms and supply chains nine months to switch to buying oil stocks from the US and Middle East – described by Business Secretary Kwasi Kwarteng as “more than enough time” to adjust.
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Joe Biden warned that “defending freedom is going to cost”
The moves by London and Washington follow pleas by Ukraine’s leader Volodymyr Zelenskyy to stop the oil imports – which have so far been allowed to continue channelling money to Moscow even as other restrictions increase.
The pressure on the Russian economy has forced the US ratings agency Fitch to further downgrade the country’s sovereign rating deeper into junk territory, saying a debt default is imminent.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The biggest domino has fallen in the strategy aimed at further isolating Russia and weakening its economy.
“The US ban on Russian energy imports is the toughest economic sanction yet on Moscow given how reliant the country is on oil and gas revenues.”
Crude and refined products from Russia accounted for about 8% of US liquid fuel imports last year, according to the Energy Information Administration, and the ban is likely to drive up consumer prices further – with inflation in the country currently running at a four-decade high.
In Britain, Mr Kwarteng said imports from Russia currently make up 8% of UK demand and urged businesses to “use this year to ensure a smooth transition so that consumers will not be affected”.
Mr Kwarteng noted that the market had already begun to “ostracise” Russian oil – even without sanctions – with nearly 70% of supplies unable to find a buyer.
He also said he was “exploring options” to end Britain’s use of natural gas from Russia, currently accounting for 4% of supply.
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Oil prices have surged this year
The UK government said oil makes up 44% of Russian exports and 17% of federal government revenue through taxation
America, which had previously floated the idea of an oil ban over the weekend, is acting more swiftly than its allies – with European nations more dependent than the US on Russian energy supplies.
Mr Biden said the US understood that countries in Europe “may not be in a position to join us”.
The Kremlin has warned of “catastrophic” consequences for consumers if the US and its allies ban Russian oil, with deputy prime minister Alexander Novak saying oil prices could hit $300 a barrel.
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Mr Novak also said it could stop the flow of gas through pipelines from Russia to Germany in response to Berlin’s decision last month to halt the opening of the controversial new Nord Stream 2 pipeline.
European countries have said they plan to reduce their reliance on energy from Russia but this will take some time.
Natural gas from Russia accounts for one-third of Europe’s consumption of the fuel. The US does not import Russian natural gas.
Germany’s chancellor Olaf Scholz said this week that an exemption for energy deliveries from sanctions was of “essential significance” for Europe’s day-to-day heating, transport, power supply and industry needs.
https://news.sky.com/story/ukraine-war-uk-set-to-ban-russian-oil-by-the-end-of-this-year-and-focus-on-us-and-middle-east-imports-12560703
