With Russia intensifying its war on Ukraine, killing civilians, and triggering a mass refugee crisis, President Joe Biden announced a U.S. ban on imported Russian oil.
Biden also acknowledged it will bring costs to Americans, particularly at the gas pump.
The action on Tuesday follows pleas by Ukrainian President Volodymyr Zelenskyy to U.S. and Western officials to cut off the imports. Biden declared in remarks at the White House that “We will not be part of subsidizing Putin’s war."
A full embargo would be most effective if it included European allies, which are also desperate to stop the violence in Ukraine and the danger Moscow poses to the continent.
Yet it’s far from clear that all of Europe would take part in an embargo.
Any curbs on Russian oil exports could send already skyrocketing oil and gasoline prices ever higher and further squeeze consumers, businesses, financial markets, and the global economy.
ABC15 spoke to Dennis Hoffman, an economics professor at ASU. He said the price of oil is set in a global market.
"Geopolitical events around the world can quite quickly manifest themselves into consequences that we see at our local stores or in this case, at the local gasoline pumps," said Hoffman.
Last year, the US imported 245 million barrels of oil from Russia. That's about 8% of all U.S. oil imports.
Hoffman said even though we don't get a lot of oil from Russia, cutting them off will affect us here.
"If you reduce the supply of something, the price is going up."
The US is the world's largest oil producer — ahead of Saudi Arabia and Russia — but it's almost the biggest oil consumer too. It can't meet staggering demand with domestic crude oil alone.
Hoffman expects domestic production to ramp up in the short term and said we could see an increase in oil imports from other areas like the middle east.
"If you can boost world supply that takes some of the pressure of oil and the world markets and that would manifest into some lower prices here," he said.
The oil in Arizona comes from refineries in west Texas and California. Arizona doesn't produce a significant amount of oil.
Oil climbs, stocks swing as US bans Russian crude imports
Stocks swung, oil prices jumped and the price of nickel surged so much that trading for it was shut on Tuesday.
The S&P 500 was virtually unchanged in midday trading, but only after earlier pinballing from a 0.4% gain to a 1% loss.
It’s coming off a three-day losing streak where worries about a possible, painful combination of higher inflation and a slowing economy triggered the index’s worst day in 16 months.