EU and US talk of ending Russian oil imports

People cross on an improvised path under a bridge that was destroyed by a Russian airstrike, while fleeing the town of Irpin, Ukraine.

The United States said it is exploring options with its European partners on banning Russian oil imports while maintaining steady supplies globally.

The US Secretary of State Antony Blinken said yesterday they were in very active discussions about banning oil imports following the invasion of Ukraine. Blinken made the comments while on a trip across Europe to coordinate with allies against the invasion. Oil prices have soared over the past week following the sanctions imposed on Russia that have also put an end to plans for a second natural gas pipeline between Russia and Germany.

The US alone imported more than 20.4 million barrels of crude and refined products a month in 2021 from Russia, about 8% of its liquid fuel imports. Mainland and Eastern Europe are also heavily dependent on Russian gas and oil.

Asked if the United States has ruled out banning Russian oil imports unilaterally, Blinken said: "I'm not going to rule out taking action one way or another, irrespective of what they do, but everything we've done, the approach starts with coordinating with allies and partners," Blinken said.

Blinken said there were a series of additional measures that the United States was looking at to increase the pressure on Russia, but he did not provide any details on what the new measures would be.

Mastercard and Visa were the latest international companies to suspend activities in Russia in response to President Vladimir Putin’s invasion of Ukraine. The move further isolates Russia’s economy. Cards issued outside of Russia won’t work at ATMs or merchants inside the country, the firms said. Russia’s largest non-state lender Alfa-Bank JSC is already working on offering cards with the China-owned UnionPay.

Separately, the Finance Ministry in Moscow said the sanctions imposed on the country will determine if international investors are able to collect debt payments on sovereign bonds denominated in foreign currencies.

Residents will receive their payments on the Russian state debt in rubles regardless of the denomination currency, the ministry said in an emailed statement yesterday.

But payments to foreign investors will depend on sanctions introduced against Russia and “exemptions established by the relevant licenses and permits,” according to the statement.

All debt will be serviced on time and in full amounts, the ministry said.

President Putin signed a decree on Saturday allowing Russia and Russian companies to pay foreign creditors in rubles as a way for the government to stave off defaults while capital controls remain in place.

Russian corporate bonds denominated in foreign currencies have plunged to deeply distressed levels in recent days as investors weighed the impact of sanctions imposed on the country in the wake of its invasion.

Traders around the world are getting ready for another volatile week as the war continues to upend financial markets. Key this week will be the last consumer inflation data available to the Federal Reserve before it gathers to consider raising rates and a closely watched meeting of the European Central Bank.

Bloomberg and Reuters