President Joe Biden ordered “profound” new sanctions targeting Russia Thursday after its invasion of Ukraine, saying Russian leader Vladimir Putin “chose this war” and his country will bear the consequences.
The sanctions target Russian banks, oligarchs and high-tech sectors, but they stop short of imposing restrictions on energy supplies from Russia, the world's third largest oil producer. The Biden administration is not expected to target Russia's oil and gas flows due to concerns about inflation and the harm it could do to its European allies and U.S. consumers, who are already grappling with the highest inflation in 40 years.
In his address to the nation Thursday, President Biden said the U.S. will “closely monitor energy supplies for any disruption” and warned U.S. oil companies not to “exploit this moment” by gauging consumers. Biden also vowed once again to take steps to limit pain at the gas pump for Americans, but just how effective that will be is up for debate.
The U.S. doesn’t have "many good options" to fight energy inflation, Isaac Boltansky, BTIG Director of Policy Research, told Yahoo Finance Live. “I’m sure the White House will do everything it can… but I’m just not sold on any of the options that they have really helping consumers.”
President Biden suggested the U.S. may once again tap the Strategic Petroleum Reserve. In November, the White House released 50 million barrels of oil from the reserve in a coordinated effort with other countries to bring down high gasoline prices. The move had a nominal and short-lived impact on prices.
“We’re already at the lowest level of reserves in the SPR since 2002, so we’re already bumping up against constraints there, and frankly, it hasn’t had that much of an impact,” said Boltansky.
The national average gas price in the U.S. is $3.54 a gallon, according to AAA, up from $2.65 a year ago, and experts project gas prices could top $4 as early as next week.
Veteran energy strategist and founder of Energy Word, Dan Dicker, said on Yahoo Finance Live that gas prices could go much higher if the war in Europe drags on.
"My guess is that you are going to see $5 a gallon at any triple-digit [oil prices] ... as soon as you get to $100. And you might get to $6.50 or $7,” said Dicker.
On Thursday, Brent crude (BZ=F) — a global benchmark — briefly jumped above $100 a gallon for the first time since 2014, but settled well below the day’s peak.
Oil prices have been kept in check by growing prospects for an Iran nuclear deal that would allow more oil into the global market.