Biden said the US will ban imports of Russian fossil fuels, including oil. This move by the US will be partially supported by the UK, which has announced that it has banned oil imports from Russia, but will continue to allow gas and coal from the country. Canada and the UK will almost go along with the US in this regard, while other European countries, which are more dependent on Russian fuels, will not participate.

 

The oil embargo... While Europe, especially Germany, keeps a distance from the embargo on Russian oil due to economic concerns, the effects of the USA's thinking of blocking Russia's oil revenues and implementing the embargo without its allies will be reflected on oil prices. Even if oil is replaced by other channels, factors such as air and sea freight, insurance, holding costs at ports will cause prices to rise and ready supply will not be able to fully close the Russian deficit.

 

Russian oil imports on a company basis… US companies imported 250 million barrels of oil and petroleum products from Russia in 2021. Source: Bloomberg, EIA

 

Russian oil accounted for about 3% of all crude oil shipments to the United States last year. When including other petroleum products such as unfinished fuel oil that can be used to produce gasoline and diesel, Russia accounts for around 8% of 2021 oil imports, although these shipments have also been on a downward trend in recent months. According to Eurostat data, Europe imports approximately 4 million barrels of Russian crude and refined products per day in comparison. According to the European Commission, 27% of Europe's crude oil imports came from Russia in 2019.

 

The serious price increases in the commodity group, especially in oil, increase the concerns about high inflation and stagflation, which is the definition of low growth.

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