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US president Joe Biden has confirmed a complete US ban on Russian oil, gas and coal imports

   News / 09 Mar 2022

Published: 09 March 2022
Location: London, UK

By Suzanne Evans, Director, Political Insight


US president Joe Biden has confirmed a complete US ban on Russian oil, gas and coal imports in a speech at the White House yesterday. "The American people will deal another powerful blow to Putin's leadership," he said. "Americans have rallied to support the Ukrainian people, and made it clear we will not be part of subsidising Putin’s war." Biden admitted the further pain inflicted on Russia would also cost US citizens. “I said I would level with the American people from the beginning,” he said. “When I first spoke of this in the beginning, I said defending freedom is going to cost us as well in the United States. Republicans and Democrats alike understand that. Republicans and Democrats alike have been clear that we must do this.”
 
The European Union also made moves yesterday to reduce the continent's reliance on Russian gas, saying it aims to cut its demand by two-thirds by the end of the year. However, Germany is still resisting any prohibition on buying Russian crude oil.
 
Britain, meanwhile, is to phase out importing Russian oil and oil products by the end of 2022. The government said the transition period will give the market, businesses and supply chains more than enough time to replace Russian imports, which make up 8% of UK demand. Britain is far less reliant on Russian fossil fuels than many European countries, mostly importing from the US, the Netherlands, and the Gulf. “Businesses should use this year to ensure a smooth transition so that consumers will not be affected,” Kwasi Kwarteng, secretary of state for business, energy and industrial strategy, said on Twitter. The ban is not set to apply to Russian gas.
 
China is said to be considering buying or increasing stakes in Gazprom, Rusal and other Russian energy and commodities companies, according to Bloomberg. The news agency says the Chinese government is in talks with state-owned companies such as China National Petroleum and Sinopec about deals to strengthen China's supplies of energy and food, as the war in Ukraine has made Beijing worried about the impact of soaring prices. Although China has pulled some Russian funding, normal trade with Russia is continuing.  
 
About 60% of Russia’s oil exports go to Europe, with 2% to the UK, while around 8% goes to the US. China accounts for about 20%.
 
Shell has apologised for acquiring a shipment of Russian crude oil last week and promised not to buy any more. The firm says it will also shut all its service stations, aviation fuels and lubricants operations in Russia, and withdraw from its involvement in all Russian hydrocarbons, including crude oil, petroleum products and liquefied natural gas.  Shell’s acquisition of 100,000 metric tons of oil last Friday, reportedly for a record discount, did not violate any sanctions, but was heavily criticised. CEO Ben van Beurden said: "We are acutely aware that our decision last week to purchase a cargo of Russian crude oil to be refined into products like petrol and diesel, despite being made with security of supplies at the forefront of our thinking, was not the right one and we are sorry." Russian oil currently makes up about 8% of Shell's working supplies.
 
The price of nickel has skyrocketed above $100,000 (£76,211) a tonne on the London Metal Exchange (LME), amid supply concerns from Russia. The price of the commodity, which is used in stainless steel and lithium-ion batteries, more than doubled yesterday, following a 70% rise on Monday, with traders with large short positions racing to cover their positions. Russia is the third largest nickel producer in the world, meaning the current conflict is putting pressure on supply of the commodity. The metal ended last year at $20,757 (£15,798) a tonne, but this week alone Nickel has jumped by as much as $72,000 (£54,800). The LME has now suspended trading in the metal on the back of the news. “The LME will actively plan for the reopening of the nickel market and will announce the mechanics of this to the market as soon as possible,” it said in a statement.
 
Ukraine's government has banned exports of rye, barley, buckwheat, millet, sugar, salt, and meat until the end of this year, according to a cabinet resolution published this morning. Hungary has also banned grain exports amid fears that the Russian invasion of Ukraine will trigger wheat shortages and soaring prices. Bulgaria, another significant wheat exporter, also said it would purchase at least half of three million tonnes of wheat still in the country’s silos. “We need to prepare for the worst-case scenario,” warned Bulgaria’s deputy Prime Minister, Assen Vassilev. Russia and Ukraine produce 30 per cent of the world’s traded wheat, but analysts have warned that disruption to planting schedules and supply chains caused by the war will significantly reduce output and impact the global market.  Prices are already surging, with wheat traded in Chicago – the international benchmark – jumping by more than 50% since war broke out, and corn rising by almost 10%, all against a general backdrop of escalating food inflation.
 
KFC and Pizza Hut parent company Yum Brands Inc.; McDonald’s, Coca-Cola, Starbucks, Levi’s, IBM, HP, EY, Zara owner Inditex, video game maker Electronic Arts Ikea, Canada Goose, Snap, Goldman Sachs, Adidas, Blackrock, Tesla, and FedEx are among the most recent companies to announce they are withdrawing from their Russian markets.
 
The owner of Uniqlo however, has defended its decision to keep its 49 Russian shops open, saying that while it will "monitor the situation" it has no plans to suspend trading. Fast Retailing's founder Tadashi Yanai told Japan's Nikkeinewspaper: "There should never be war. Every country should oppose it…but clothing is a necessity of life. The people of Russia have the same right to live as we do."
 
A leading ratings agency has warned Russia is likely to soon default on its debts, as it downgraded the country's bonds further into "junk" territory, the BBC reports. Fitch Ratings slashed its assessment of Russia to almost the bottom of its scale, just days after downgrading it from investment status. "The further ratcheting up of sanctions, and proposals that could limit trade in energy, increase the probability of a policy response by Russia that includes at least selective non-payment of its sovereign debt obligations," Fitch said. On Sunday, Moscow told investors that it would continue to service its sovereign debt. However, it warned that international sanctions imposed on its energy industry could limit its ability and willingness to meet its obligations. "The actual possibility of making such payments to non-residents will depend on the limiting measures introduced by foreign states in relation to the Russian Federation," the finance ministry said in a statement. If Russia did fail to make payments on its debt it raises the possibility of the first major default on the country's sovereign bonds since the wake of the 1917 Bolshevik revolution, the BBC says.
 
Households are heading for an "almost inevitable" rise in energy bills in the autumn, the boss of energy regulator Ofgem has said. Spikes in wholesale gas prices, which were rising even before Russia's invasion of Ukraine, will be passed on to consumers, Jonathan Brearley told the BBC. He called for the shift to green energy to speed up the move away from gas, saying: "While it is too early to predict what the price cap will be in October, a price increase is almost inevitable," he said. The energy price cap is already set to rise in April when millions of households will face an increase in average energy bills of nearly £700. In October, the price cap will be reset. Ofgem and energy-watch organisations have already warned average bills could reach £3,000.
 
Bank transfer fraud is costing victims £28,000 every hour as banks have only reimbursed less than half of the money lost to scams, Yahoo Finance UKreports. Between July 2019 and the end of June 2021 a total of £854m was lost by over 300,000 customers who fell victim to authorised push payment fraud. Although most banks have signed up to voluntarily reimburse all customers who are not at fault, those that have not mean only 42% of losses was returned, Which?’s analysis of UK Finance figures show. As a result, £495m has not been reimbursed, leaving scam victims to shoulder net losses at a rate of £4.7m a week — equivalent to £676,881 a day or £28,203 an hour.
 
New mortgage commitments in the UK fell 2% to £77.3bn during the final quarter of last year, compared to the previous quarter, as the government’s stamp duty holiday ended. According to the Bank of England’s mortgage lenders and administrator return, this was 11.9% lower than the recent peak of £87.7bn seen a year earlier. The data also revealed that the outstanding value of all UK residential mortgage loans stood at £1.6tn at the end of the period, 4.7% higher than a year before.
 
MPs on the current and former Treasury Committee are calling for a fresh inquiry into the interest rate-rigging scandal which led to two bankers who blew the whistle at Barclays being jailed. The move comes after the BBCuncovered leaked audio tapes and documents that suggest the Bank of England (BoE) and top government officials pressured Barclays to rig interest rates: in the Radio 4 podcast The Lowball Tapes, the recordings implicate both the BoE and government officials in pressuring banks to rig interest rates. The audio recordings and documents were never seen by a previous parliamentary inquiry into the scandal in 2012, and neither was much of the evidence shown to juries in nine rate-rigging trials of traders and brokers that were held between 2015 and 2019, so MPs are concerned the wrong people may have been prosecuted, although The Serious Fraud office told the broadcaster it conducted a thorough investigation. The two traders jailed for rigging interest rates, Peter Johnson and Colin Bermingham, the original whistleblowers of the scandal, have repeatedly claimed they are the victims of a whole series of miscarriages of justice. A total of 38 traders were prosecuted, 24 of them in the UK. After nine criminal trials on both sides of the Atlantic, 11 were convicted. Andrew Tyrie MP, who chaired the committee that investigated the scandal in 2012, told the BBC if they'd known what the BBC has since discovered they would have investigated further, changing the context in which decisions were taken to prosecute 24 traders. "From what I can tell the whistleblowers were, as the name suggests, trying to do the right thing. Whistleblowing is a crucial part of investigative machinery. And it's very important, it should be seen to function well. And it doesn't seem to work in this case," he said.
 
Visa and Mastercard are poised to put up interchange fees, the levy US retailers pay when accepting credit cards. The credit card firms say planned increases had been delayed because of the pandemic, but according to the Wall Street Journal (WSJ), the increase will now happen in April. American merchants paid an estimated $55.4bn (£42.17bn) in Visa and Mastercard interchange fees last year, more than double the amount paid in 2012. It is not yet known how much the fees will go up by.
 
The price of Bitcoin rallied nearly 7% to $41,900 (£31,891) earlier this morning after a mis-published statement from US Treasury Secretary Janet Yellen revealed President Joe Biden's impending crypto order would 'support responsible innovation' alongside any regulation of the digital asset industry. The White House's long-awaited executive order directed at cryptocurrencies has recently attracted strong attention because of speculation that wealthy Russians could be using bitcoin and dollar-pegged stablecoins to bypass economic sanctions levied by the West. As such, several analysts have been worried that the Biden administration would take a hard stance on the evolving crypto sector. Yelland’s statement, dated March 9, was posted on the Treasury Department’s website on Tuesday night and was taken down shortly after it was published.
 
Google has agreed to buy cybersecurity firm Mandiant for $5.4bn (£4.11bn) in cash. The acquisition is expected to close later this year, whereupon Mandiant, which was founded in 2014, will join the Google Cloud.


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