Washington - The United States’ move to ban Russian oil will likely prompt Moscow to make a more aggressive shift towards Asia and other non-Western markets, Sovereign Wealth Management CEO Gary Korolev told Sputnik.
Earlier on Tuesday, US President Joe Biden announced the United States would ban Russian oil imports.
“While this embargo does create problems, Russia still has other places where it can sell its oil, including Asia and Europe depending on how harsh or soft Europe sanction regime will be,” Korolev said.
“These sanctions are likely to cause Russia to make an even more aggressive shift towards Asia and non-Western aligned markets.”
Korolev added that while consequences for the Russian economy are going to be negative in the short and mid term, only 8% of Russian oil exports per day come to the United states.
Meanwhile, US gasoline prices reached an all-time high record of $4.17 per gallon on Tuesday, the American Automobile Association (AAA) said. The AAA added that this is the highest recorded national average price and that the average price for regular gas was $4.065 per gallon, while a week ago it was $3.619.
When asked what impact will the ban have on gas prices in US and On US economy, Korolev said, “historically, when there is a large and sustained spike in gasoline prices it leads to a recession.”
“Many can remember $140 per barrel gasoline price right before the great financial crisis.
“This again happens because consumers have to spend that much more on gas and do not have as much left over for other goods and services," he said.
“One long term positive aspect for the US economy maybe the government will be more willing to spend on hydrocarbon infrastructure to reduce, or eliminate reliance on oil imports. This may mean growth in a shale, and offshore oil sectors. It may also mean increased potential for new pipelines being built,” Korolev said.
With regards to the ban’s effect on the global market and the oil prices, Korolev believes that this decision will only serve to keep oil prices elevated, while likely contributing to a discount for Russian oil.
The United States and its allies have imposed comprehensive sanctions against Russia in response to its special military operation in Ukraine. The sanctions have slowed but not entirely eliminated the ability of Russian exporters of oil and gas to transact deals that require world financial networks and especially dollars.
Russia provides 10% of the world's crude oil needs and 40% of Europe's gas requirements. The United States, however, buys a limited amount of Russian oil, taking just 20% of the 10.5 million barrels per day exported by Russia in 2021.