Explainer: US mulls banning Russian oil imports, will it spell trouble?

The ongoing Russian invasion has not elicited any military reaction from the West but US and other allies have moved to impose economic sanctions aimed at crippling Russian economy. As a further step in this direction, the US is planning to ban oil imports from Russia.

Russia is among prominent oil and gas producers in the world.

A bipartisan group of US lawmakers last week introduced the Ban Russian Energy Imports Act, which would declare a national emergency as a result of Russian aggression and prohibit all US imports of Russian energy.

US President Joe Biden had initially resisted plans to ban Russian oil in light of inflation but strong anti-Moscow sentiment among Americans has forced the administration to hold discussions in that direction.

Will ban on Russian oil impact US oil market adversely?

Russian oil forms amounts to 10 per cent of total oil imports of US. Experts are saying that since percentage is low, the US would be able to offset the effect caused by potential oil shortage.

"I wouldn't minimize what it takes to replace Russian oil, but it's achievable," said Antoine Halff, a research scholar at Columbia University's Center of Global Energy Policy. He was quoted by AFP.

Will oil prices shoot up?

Even without a ban, oil prices have risen about 30 percent in response to the Russian invasion.

US gasoline prices averaged $4.07 a gallon on Monday, an increase of $0.62 from a month earlier and 47 percent higher than the year-ago level, according to the American Automobile Association.

How enthusiastic is Europe to join Russian oil ban?

Europe, as compared with the US, is more reliant on Russia when it comes to energy products. Europe imports about 40 per cent of its natural gas from Russia. Supply of energy products also gives Russia some political leverage over Europe.

US initiative to ban Russian oil would be more effective if Europe joined the effort. But there are strong indications of low enthusiasm among European countries over a total ban.

How can the US make up for oil shortfall?

The situation has arisen an a peculiar juncture as Iran, a major oil producing nation is negotiating with the West to revive 2015 nuclear deal. Aim of the Islamic Republic remains to be free of crippling US sanctions which are choking its economy. Iran has given indications that if US lifts sanctions, it was ready to increase oil output.

Will US petroleum producers make up the difference?

Large domestic companies such as ExxonMobil and Chevron have been cautious about ramping up investment in response to higher oil prices, in part due to Wall Street's skepticism towards aggressive drilling plans. The firms have shifted some of their extra cash from higher profits on dividends and share buybacks.

Oil prices remaining above $100 a barrel likely would incentivize some more activity, but producers also are watching the global picture to see how the situation evolves.

"The biggest risk here, of course, is if you go ahead and you start drilling, and then the United States makes a deal with Iran, and also this Iranian oil hits the market," said Stephen Schork an oil analyst who writes a newsletter on energy markets.

How will the Russia crisis affect US climate policy?

The cornerstone of Biden's climate agenda, the Build Back Better Act, was already struggling on Capitol Hill, even before the invasion of Ukraine seized national attention.

Biden's critics in the Republican party have said the crisis highlights the need to reconsider White House policies such as the canceling of the Keystone pipeline and the removal of drilling acreage in Alaska and other environmentally sensitive habitats.

But environmentalists say the lesson of the crisis isn't the need for more domestic oil production, but more investments in electric vehicles and renewable energy.

(With inputs from agencies)