The Big Insight: The U.S. ban on Russian oil imports may be just the beginning of a broader worldwide effort to undermine the Russian energy sector that is fueling its war in Ukraine.
1. Oil and gas proceeds fund more than one-third of the entire Russian federal budget.
Russia produces 12% of the world’s oil. Its economy is strongly dependent on its publicly owned oil and gas sector — which employs about 2.5 million people, and generates an average of $191 million in revenue every day for the Kremlin.
2. Russian oil accounts for about eight percent of U.S. oil imports and three percent of our total consumption.
More than 61% of imported U.S. oil comes from Canada, and the U.S. also imports more oil from Mexico and Saudi Arabia than from Russia. As much as one-quarter of U.S. oil imports from Russia go to just one state, Hawaii.
Since the onset of Russia’s war in Ukraine just two weeks ago, the average price of a gallon of gas in the U.S. has risen from $3.54 to $4.17. Prices are likely to continue marching higher as a consequence of the Russian oil ban as well as broader disruption in the global energy markets.
3. The European Union’s dependence on Russian energy has grown markedly, with Russia providing about 30% of the EU’s oil last year, compared to just 22% in 2000.
Lithuania, a member of both the EU and NATO, got 61% of its oil imports from Russia last year — and Hungary, also a member of both, relied on Russia for 74% of its oil imports. Russia also provided 40% of the EU’s natural gas in 2021.
European dependence on Russian energy at least partly explains why the U.S. and allies have not yet levied direct sanctions on the Russian energy industry or the banks that finance them. Such a step could devastate the largest Russian oil and gas companies like Rosneft and Gazprom, but could also jeopardize the energy security of Europe. On Tuesday, the EU released a multi-step plan aiming to reducing its dependence on Russian gas by two-thirds by the end of this year.
4. The U.S. became a net annual petroleum exporter in 2020, exporting about 8.51 million barrels per day while importing about 7.86 million.
The U.S. produced about 18.4 million barrels per day overall in 2020. Despite this output the U.S. still has to import significant quantities of oil because crude comes in many forms that require different processing and refining needs and because there are some parts of the country where it is cheaper and more efficient to transport and process foreign fuels.
5. The U.S. imposed a total embargo on oil from Venezuela in 2019.
This is not the first time the U.S. has cut off oil imports from a hostile nation. The Trump Administration cut off Venezuelan oil imports to penalize the regime of President Nicolás Maduro, turning off the flow of about 500,000 barrels per day into the U.S. The U.S. has also repeatedly sanctioned Iranian oil since the mid-1980s.
This article first appeared on Real Clear Policy