How Will U.S. Ban on Russian Oil Affect Gas Prices?

The Biden administration appears set to ban the import of Russian oil with an announcement possibly coming as early as Tuesday in a move that could push gas prices higher.

Gas prices passed an average of $4 a gallon on Monday as the U.S. considered a ban on Russian oil imports due to the Russian invasion of Ukraine that began on February 24. That represents a rise of more than 10 percent in a week.

That price spike could be further exacerbated after it was reported that President Joe Biden's administration will ban Russian oil, though the U.S. is far less dependent on imports from Russia than Europe is.

A total of 29 U.S. states had regular gas costing over $4 on Tuesday, while the highest one-week rise in the price of gas—a leap of 19.5 percent—occurred in Kentucky.

Bloomberg News senior White House correspondent Jennifer Jacobs reported on Tuesday that the administration will move to ban Russian oil imports following speculation about the move and calls from legislators on both sides of the aisle.

"White House announcement as soon as TODAY," Jacobs tweeted.

The Associated Press (AP) also reported that the Biden administration would move forward with a ban, citing an anonymous sources familiar with the matter.

According to the Energy Information Administration (EIA), the U.S. imported an average of 20.4 million barrels of crude and refined products from Russia per month in 2021, accounting for around 8 percent of the nation's liquid fuel imports.

However, the U.S. is far less reliant on Russian imports than nations in Europe with the European Union (EU) importing around 25 percent of its crude oil from Russia.

Russia also supplies 40 percent of Europe's gas and Moscow has warned it could cut off the gas supply to the EU in response to a ban on its oil exports.

White House Press Secretary Jen Psaki noted that the U.S. is less dependent on Russian oil during a briefing on Monday, saying that "we import such a smaller percentage of oil from Russia than the Europeans do but also because we have a much larger capacity for producing our own oil."

"So, it is a very different circumstance, and certainly we are going to continue to consult with, continue to convey, where our plans, where our discussions are here internally with the Europeans. But I would look at it through a different prism than past coordinated efforts," she said.

Nonetheless, a ban on Russian oil is likely to drive prices at the pump even higher. The American Automobile Association (AAA), which keeps track of gas prices across the U.S., reported on Tuesday that the national average price was now more than $4.17 per gallon.

Devin C. Gladden, AAA spokesperson, told Newsweek in a statement on Tuesday: "The ban will likely cause oil prices to spike."

"Given that the price of crude oil is the leading factor that contributes to the price consumers pay at the pump, an increase in crude prices will cause pump prices to spike, too," Gladden said.

Russian Deputy Prime Minister Alexander Novak warned in a statement on state TV on Monday that it was "absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market."

"The surge in prices would be unpredictable," Novak said. "It would be $300 per barrel if not more."

Despite Novak's warning, it is not yet clear to what extent a ban on Russian oil imports into the U.S. would affect oil prices. The EU may not choose to follow the Biden administration in implementing its own immediate ban but EU leaders announced on Tuesday that the bloc would work toward becoming energy independent from Russia "well before 2030."

Prices at a California Gas Station
Gas prices over $6.00 and $7.00 a gallon are posted at a petrol station in Los Angeles, California on March 7, 2022. A ban on Russian oil imports could push prices further. Robyn BECK / AFP/Getty Images