Biden's last stand: U.S. ramps up sanctions on Russian oil

American sanctions have significantly affected oil prices. The widely traded Brent crude rose nearly 4%, reaching £66 per barrel in the previous session. Meanwhile, American West Texas Intermediate nearly hit £63, as Bloomberg detailed.

The agency notes that the United States imposed its most aggressive and ambitious sanctions on the Russian oil industry on Friday, targeting major exporters, insurance firms, and over 150 tankers.

Dr Benjamin L. Schmitt, an energy policy expert from the University of Pennsylvania, said the White House's restrictions on the Russian energy sector would significantly increase pressure on the Kremlin but should have been implemented at the start of the war. He added that the new administration should further strengthen sanctions.

When the Joe Biden administration introduced an unprecedented set of sanctions targeting the Russian economy shortly after Russia's full-scale invasion of Ukraine, one key area remained relatively untouched—Russian energy.

The reason given at the time was concerns about rising global oil and gas prices, which, according to the White House, would fail to harm and actually help Russia by financing its aggression. Later, the U.S. and its G7 partners set a cap on the price of Russian oil transported by sea at £49 per barrel. However, this proved largely ineffective as Russia found ways to circumvent these restrictions.

A shift in approach to the Russian oil sector had to wait until the final days of the Biden administration. On Friday, the White House imposed comprehensive restrictions on over 400 entities, including two of Russia's largest oil producers (Gazprom Neft and Surgutneftegas), responsible for more than a quarter of the country's oil exports. White House officials stated that the sanctions are intended to affect every phase of Russian oil sales, from production to distribution and trading companies to ports receiving Russian tankers.

In Schmitt's assessment, the new sanctions are significant but delayed.

The measures introduced on Friday, near the conclusion of the Biden administration, were seen as a crucial move to intensify energy sanctions on Putin's Kremlin after almost three years of devastating conflict in Ukraine. Nonetheless, the expert pointed out that these actions should have been initiated at the war's outset. If effectively enforced, they might have already caused significant economic disruptions in Russia, potentially compelling it to rethink its aggression toward its democratic neighbour.

Schmitt suggested that these sanctions create opportunities for the Trump administration in the face of planned negotiations to end the war. In his view, the administration should further increase pressure on Russia and "reject the gradual approach" to sanctions seen during the outgoing administration.

This will be necessary to exert maximum sanction pressure required to support any fair and lasting peace in Ukraine. To this end, the new Trump administration should immediately take steps to expand this latest series of sanctions upon taking office, Schmitt said.

To achieve the maximum sanction pressure needed to secure a just and lasting peace in Ukraine, it will be essential to build on these efforts. According to Schmitt, the incoming Trump administration should promptly act to broaden the scope of this latest round of sanctions upon assuming office.

Daniel Fried, former U.S. ambassador to Poland and Atlantic Council expert, shares a similar opinion.

He also noted that the timing of these measures is related both to the United States significantly increasing its oil production in recent years and the post-election period when oil and gas prices do not carry as much significance in domestic politics as during an election campaign.