Crude oil retreated on Thursday afternoon as U.S. President Joe Biden prepared yet another round of sanctions on Russia in order to punish Russia for its earlier attack on Ukraine.
In a White House presser, President Joe Biden recapped existing sanctions and announced new ones. The sanctions are purposefully designed, President Biden said, to maximize the long-term pain inflicted on Russia, while minimizing the pain felt by American consumers.
And it’s not just the United States. President Biden said he met with the G7 leaders earlier on Thursday, the members of which are in “full and total” agreement. “We will limit Russia’s ability to do business in dollars, euros, pounds, and yen” to limit Russia’s ability to be part of the global economy.
The United States will stunt the ability to finance and grow the Russian military. It will impair Russia’s ability to compete in today’s high-tech economy.
The U.S. has also sanctioned Russian banks that together hold around $1 trillion in assets. The largest bank had already been cut off from the U.S. financial system. Today, four more major banks will be included. “That means every asset they have in America will be frozen.”
The United States has also sanctioned additional Russian elites and their family members.
On Tuesday, The U.S. sanctioned the Russian government to keep them from raising money from U.S. or European investors. Now, this will be applied to Russia’s largest state-owned enterprises, which are those whose assets exceed $1.4 trillion.
President Biden vowed that some of the most powerful impacts will come “over time”.
The President issued a reminder that U.S. forces are not and will not be engaged with Russian forces in Ukraine, but that the U.S. will defend NATO territory with the full force of American power.
In reference to the current gasoline price situation, the President said the White House was taking active steps to bring down the cost. He issued a warning, however, to American oil and gas companies. They should not exploit this moment to hike their prices to raise profits.
The sanctions specifically allow energy payments to continue, and energy supplies are being monitored for disruption. To that end, the United States has once again engaged in a campaign with countries around the world “to elevate collective release” of strategic petroleum reserves of major energy-consuming countries. The US will release additional barrels of oil as conditions warrant.
Both GOP and Democratic lawmakers have called on the White House to slap Russia with harsher sanctions, following the President’s Tuesday sanctions on Russian financial institutions and sovereign debt, and Wednesday sanctions on the company that owns the non-operational Nord Stream 2 pipeline.
The first round of sanctions from the United States was called by some analysts as underwhelming. None of the first sanctions announced by the U.S., the European Union, or the UK targeted any Russian bank that deals in Russian oil and gas transactions. While lawmakers were calling for harsher sanctions, the fact that energy markets were not directly affected seemed to have injected some sort of calm to the market that the West would not target energy supply from the country accounting for over 10 percent of global oil supply and nearly 40 percent of the natural gas Europe imports.
“Putin will be a pariah on the international stage,” Biden said.
Oil prices eased somewhat, with Brent falling back below $100 per barrel following the press conference, absent of any energy-related sanctions.
By Julianne Geiger for Oilprice.com