Oil and gas prices are through the roof as investors fret over the continuing Russian invasion of Ukraine.
The national average price for a gallon of gasoline on Monday sat at $4.07. The U.S. oil benchmark, West Texas Intermediate crude futures, was pushing $118, a big increase from the $90 it was at before the war broke out. On Sunday, WTI crude briefly touched $130, the highest level since 2008.
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The Russian invasion of Ukraine has fueled concerns about global energy shortages given that Russia is one of the world’s largest producers of oil and that parts of Europe are reliant on its energy exports. While the United States and other Western countries have slapped sanctions on Moscow, there were energy carve-outs included to insulate the global economy.
Meanwhile, Ukrainian President Volodymyr Zelensky has been calling for the U.S. and its allies to sanction Russia’s oil industry and cut off its ability to export crude. Some U.S. lawmakers have also been working on a bill to ban Russian oil imports to the U.S.
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Despite the mounting pressure to act against Russia’s oil industry, President Joe Biden has so far resisted calls to act. He has not ruled out sanctioning the country’s energy sector, although he has insisted that “nothing is off the table.”
The White House is threading the needle between trying to punish Russia and its leader Vladimir Putin for the incursion into Ukraine while also holding down energy prices so that U.S. consumers don’t see gas prices skyrocket more than they already have.
“There isn’t a strategic interest in reducing global oil supply because that will increase the price of barrels of oil and increase gas prices,” said White House press secretary Jen Psaki on Friday. “If you reduce supply in the global marketplace, you are going to raise gas prices, you’re going to raise the price of oil, and that is something the president is very mindful of.”
“Anyone who’s calling for an end to the carve-out should be clear that that would raise prices,” she said the day before.
Secretary of State Antony Blinken indicated on Sunday that U.S. and European countries are eyeing what a prospective ban on Russian oil would look like.
“We are now talking to our European partners and allies to look in a coordinated way at the prospect of banning the import of Russian oil while making sure that there is still an appropriate supply of oil on world markets,” Blinken told CNN. “That’s a very active discussion as we speak.”
While the U.S. has sidestepped sanctioning Russian oil, it has levied a variety of other punitive measures against Putin and his country. In perhaps the most notable example, the U.S. targeted and froze a big chunk of the more than $600 billion currency reserve that Putin built up as a cushion.
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Western powers also announced that certain Russian financial institutions would be cut off from the SWIFT system, a move that Biden had backed away from pursuing at first. The Society for Worldwide Interbank Financial Telecommunication, better known as SWIFT, is the main secure messaging system that facilitates cross-border financial transactions and money transfers.
Because of the biting sanctions, the ruble, Russia’s currency, has been in a free fall. The ruble is now worth far less than a penny. The ruble was down 14% on Monday and was trading at about 142 against the dollar.
