The announcement on Tuesday that the United States will ban imports of Russian oil was expected, after days in which it was considered that the United States and the European Union were studying the possibility of close the oil spurt and gas that they buy from Russia as another measure to curb the Russian war machine that is besieging Ukraine in an invasion that is heading into its second week.
President Joe Biden maintained this Tuesday – at a press conference at the White House – that the measure is taken when it is clear that “we will not be part of subsidizing the war of [Vladimir] Putin”, against Ukraine.
With this, the president consummates the prohibition of the arrival of Russian ships with oil to US ports, as part of the bipartisan measures to weaken Russian power. Although he recognized that this will have costs in the economy and sacrifices, the president believes that the entire country supports the measures taken.
Economic analyst Isaac Cohen, former head of the United Nations Economic Commission for Latin America and the Caribbean, explained to the voice of america that with the economic recovery in the second stage of the COVID-19 pandemic, the economy had already begun to heat up and as a result, oil prices were increasing, partly due to demand, but at the same time, inflation started to rise globally, with supply chains acting as a short circuit.
With these projections, “the economy for this year predicted a contraction.” Now that the element of the invasion of Ukraine and these blocking sanctions on Russian oil are included, the forecasts change radically because all the factors have been activated, he said.
And if it is transferred to a terrain as vulnerable as Latin America, the situation runs in both directions in “the countries that produce oil and those that do not: for those that do not produce it – such as the Central American countries, some Caribbean countries and for some South Americans – the blow will be very hard because this means that the oil bill will become more expensive and more foreign currency will have to be used to pay, “explains Cohen.
And for producers like Venezuela, Ecuador, Colombia, Trinidad and Tobago, among others, those countries will benefit from higher prices. “The situation is such that the United States, which does not have diplomatic relations with Venezuela, has sent a mission to Venezuela to persuade them to increase production”, comments the expert.
In this regard, Republican Senator Rick Scott, speaking to the Voice of America, was highly critical of the trip of the American delegation to Caracas this past weekend to address, among other issues, “energy security,” as acknowledged by the White House on Monday.
“We have all seen the human rights violations and the damage that Maduro has caused to Venezuelans for many years. We have to understand that the Maduro regime is a threat to the stability of Latin America and the national security of the United States” Scott opined. “Maduro is a genocidal tyrant like Putin. We cannot trade dependence on one murderous dictator for another.”
Internal fire with oil on the hands
President Biden said that the decision was made in consultation with European partners who are currently not in a position to disconnect from the Russian hydrocarbon supply, since for some countries such as Germany and France it represents up to 60% dependence on liquefied gas. and other fuels.
For Biden, the measure is part of a “long-term strategy” to reduce Russia’s energy dependence and, incidentally, reduce the Kremlin’s room for maneuver.
However, from the wing of the opposition Republican Party they question the movements of the Democratic administration to find obstacles to the situation.
Congressman Mario Díaz-Balart published this Tuesday on his social networks that “buying blood oil from Russia, Iran, Saudi Arabia and Venezuela is reckless and absolutely dangerous for the national security of the United States.”
And he added that President Biden “must end his war against American energy independence.”
For his part, Democratic Senator Tim Kaine endorsed the decision made by President Biden and said that “an immediate ban on imports of Russian energy will help ensure that we are not contributing in any way to financing Russia’s unprovoked and unjustified war. against Ukraine,” he said in a statement.
Other lights to see the problem
With the implementation of this new marker in the sanctions that could affect the US economy, there is still room for maneuver, according to Columbia University economics professor Christopher Sabatini, in statements to FLY
“The US ban on Russian oil and gas will affect the US economy by increasing oil and gas prices, but will not cause shortages. In fact, the US only depends on a small percentage, 8 to 10% of its oil and gas imports from Russia”, explains the expert.
However, in world hydrocarbon markets the situation may be even more complex. “Perceptions and fears often drive prices more than actual supply and demand,” he adds.
In the case of Europe, the ban would have a greater effect due to the high dependence on oil and gas from Russia. For now, says Sabatini, the dynamic tends to strengthen producers in other regions, including the United States, to face the high demand, although this will take time.
“Temporary price spikes will be an inevitable consequence in both cases, higher in the case of Europe. And this will affect supply chains and economic growth. But in the long term, this is a price that the world must pay”, Sabatini pointed out. “Russia’s gratuitous success in its aggression against Ukraine threatens long-term world peace and stability in a much greater way than temporary increases in oil and gas prices and potential disruptions.”
And Eric Farnsworth, vice president of the Council of the Americas (AS/COA), a center for economic analysis in Washington DC, tells VOA that the price escalation from the rise in the price of oil, it is already taking its toll on vast regions of the American continent.
with what the new US sanction to Russian oil is one more step that will deepen the prices of basic products, which “including energy and food, are increasing everywhere as a result of the Russian invasion of Ukraine. For countries that export raw materials, like some South American countries, at least for the producers.”
But added to inflation and the weak social protection networks left by the effect of the Covid-19 pandemic, this new economic shock “can take them to the breaking point,” he predicts.
* With the collaboration of Jorge Agobian, VOA correspondent at the White House.
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