Ukraine’s President Volodymyr Zelenskyy has thanked US President Joe Biden following his announcement of a ban on Russian oil imports.
President Biden said America’s latest move to punish Mr Putin over his invasion of Ukraine – which will also stop gas imports – targeted the “main artery of Russia’s economy”.
Britain is to phase out Russian oil imports by the end of the year as the prime minister said “the noose is tightening” on Vladimir Putin’s regime.
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In a video message from the Ukrainian president’s office, Mr Zelenskyy said: “I am grateful personally to President of the United States Biden for this decision.
“For this leadership. For this most powerful signal to the whole world. It is very simple: every penny paid to Russia turns into bullets and projectiles that fly to other sovereign states.”
He added: “Either Russia will respect international law and will not wage wars, or it will not have the money to start wars.”
More from BusinessHe also urged all parties in the war to “sit down at the negotiating table” and have talks “in the interests of the people, not obsolete murderous ambitions”.
The sanctions against Russia have pushed oil prices pushed above $133 a barrel, signalling more pain ahead in the coming months for fuel users on both sides of the Atlantic.
Image: Brent crude year to date oil price chartIn Britain, the main impact is likely to be felt by buyers of diesel, where Russia meets 18% of the country’s needs. UK fuel prices are already also at all-time highs.
Boris Johnson said the latest sanctions would add to the “extreme” pressure on Russia, already being battered by a plunge in the rouble to record lows.
Major Russian banks have been blocked from the SWIFT messaging system that enables global payments and billions in assets held by its central bank have been frozen, while multinational businesses from BP and Shell to Visa and Mastercard have shut up shop or announced plans to exit the country.
Mr Johnson said Britain “can’t move overnight” to end oil imports but insisted “this is a big step that the world is taking” with European nations also now preparing to reduce their dependence on Russian energy despite their reliance on it.
“The level of disgust and outrage at what is happening in Ukraine is mounting around the world and the noose is tightening on the Putin regime,” he said.
Britain’s plan will give firms and supply chains nine months to switch to buying oil stocks from the US and Middle East – described by Business Secretary Kwasi Kwarteng as “more than enough time” to adjust.
The pressure on the Russian economy has forced the US ratings agency Fitch to further downgrade the country’s sovereign rating deeper into junk territory, saying a debt default is imminent.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The biggest domino has fallen in the strategy aimed at further isolating Russia and weakening its economy.
“The US ban on Russian energy imports is the toughest economic sanction yet on Moscow given how reliant the country is on oil and gas revenues.”
Crude and refined products from Russia accounted for about 8% of US liquid fuel imports last year, according to the Energy Information Administration, and the ban is likely to drive up consumer prices further – with inflation in the country currently running at a four-decade high.
In Britain, Mr Kwarteng said imports from Russia currently make up 8% of UK demand and urged businesses to “use this year to ensure a smooth transition so that consumers will not be affected”.
Mr Kwarteng noted that the market had already begun to “ostracise” Russian oil – even without sanctions – with nearly 70% of supplies unable to find a buyer.
He also said he was “exploring options” to end Britain’s use of natural gas from Russia, currently accounting for 4% of supply.
The UK government said oil makes up 44% of Russian exports and 17% of federal government revenue through taxation.
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The Kremlin has warned of “catastrophic” consequences for consumers if the US and its allies ban Russian oil, with deputy prime minister Alexander Novak saying oil prices could hit $300 a barrel.
Mr Novak also said it could stop the flow of gas through pipelines from Russia to Germany in response to Berlin’s decision last month to halt the opening of the controversial new Nord Stream 2 pipeline.
European countries have said they plan to reduce their reliance on energy from Russia but this will take some time.
Natural gas from Russia accounts for one-third of Europe’s consumption of the fuel. The US does not import Russian natural gas.
Germany’s chancellor Olaf Scholz said this week that an exemption for energy deliveries from sanctions was of “essential significance” for Europe’s day-to-day heating, transport, power supply and industry needs.