01:41 - Source: CNNBusiness
Oil prices spike as supply disruption fears grip US
Washington CNN  — 

The White House on Wednesday appeared to downplay its openness to sanctioning Russian oil as a means of punishing Russian President Vladimir Putin.

The administration declined to rule it out entirely but said doing so was not in US strategic interests, citing disruptions to the global oil supply and the effect it would have on gas prices.

“We don’t have a strategic interest in reducing the global supply of energy,” principal deputy press secretary Karine Jean-Pierre told reporters aboard Air Force One.

Jean-Pierre said that sanctions like that “would raise prices at the gas pump for Americans,” something that the White House is “very aware of.”

She lauded US companies that have cut ties with Russia, and said the administration welcomes those announcements.

But, Jean-Pierre said, the administration is more strategically focused on impacting Russia’s energy status over time.

“We and our allies and partners have a strong collective interest to degrade Russia’s status as a leading energy supplier over time. That’s why we’ve been talking about diversification. That’s why we shut down Nord Stream 2. That’s why we’re helping to accelerate diversification for Russian gas. And that’s why we’re denying critical technology inputs that Russia needs to maintain its production capacity in oil and gas,” she said.

These more tempered comments come after President Joe Biden Biden said sanctioning Russian oil exports remained a possibility.

“Nothing is off the table,” Biden said when specifically pressed on sanctioning Russian oil exports earlier Wednesday.

White House press secretary Jen Psaki had also said the possibility of the US sanctioning Russian oil exports was “still on the table” earlier Wednesday.

Taking such a step would be an extraordinary measure that could have an intense effect on domestic gas prices, however, and Psaki made clear that the White House’s top priority is to minimize the impact at home.

“What (Biden) does not want to do is topple the global oil markets or the global marketplace or impact the American people more with higher energy and gas prices,” Psaki told CNN’s John Berman on “New Day.”

“That’s something we heavily weigh. It’s still on the table. It’s not off the table. But again, that’s how the President looks at this as we’re announcing and pursuing additional steps,” she added.

The US has already announced a slew of sanctions against Russia and President Vladimir Putin since the country’s unprovoked invasion of Ukraine last week. But the unprecedented step of sanctioning its oil experts would likely send prices skyrocketing, dealing a painful blow to consumers around the world as Russia is the world’s No. 2 oil producer.

Though the US consumes very little Russian oil – oil imports from Russia stood at just 90,000 barrels per day in December – the interconnected global market means supply shocks in one part of the world can impact prices everywhere.

The comments come as the US and other countries scramble to steady gas prices at home as the crisis enters its second week. On Tuesday, the White House and International Energy Agency announced that the US and its allies agreed to a release of 60 million barrels of oil from their reserves, a move the IEA said was meant to send a “strong message to global oil markets that there will be no shortfall” as a result of Russia’s invasion of Ukraine.

Prices surged even higher Wednesday, as global crude oil prices rose to more than $110 per barrel and the cost of natural gas skyrocketed to a new record in Europe as Russia’s escalating military campaign in Ukraine stoked fear in markets.

Despite soaring prices, Organization of the Petroleum Exporting Countries members and Russia agreed to stick to their current plan of gradually increasing output by just 400,000 barrels per day per month.

The cartel said in a statement “that current oil market fundamentals and the consensus on its outlook pointed to a well-balanced market, and that current volatility is not caused by changes in market fundamentals but by current geopolitical developments,” adding that its next meeting will be March 31.

Echoing Psaki, Vice President Kamala Harris said Wednesday that “everything is on the table” as the US assesses economic sanctions on Russia and continued to stress the US will not send troops to fight Russian forces in Ukraine.

“What we are going to continue to do is stand firm with our allies in terms of reassessing what we are doing with sanctions. Everything is on the table for consideration, frankly,” she told NBC News.

This story has been updated with additional developments Tuesday morning.

CORRECTION: An earlier version of this story and its headline misstated the nature of the possible actions the White House may take on Russian oil.

CNN’s Kate Sullivan and Matt Egan contributed to this report.