FRANKFURT, Germany (AP) — For months after Ukraine’s Western allies limited sales of Russian oil to $60 per barrel, the price cap was still largely symbolic. Most of Moscow’s crude — its main moneymaker — cost less than that.

But the cap was there in case oil prices rose — and would keep the Kremlin from pocketing extra profits to fund its war in Ukraine. That time has now come, putting the price cap to its most serious test so far and underlining its weaknesses.

Russia’s benchmark oil — often exported with Western ships required to obey sanctions — has traded above the price cap since mid-July, pumping hundreds of millions of dollars a day into the Kremlin’s war chest.

With Russia’s profits rising, the Israel-Hamas war pushing up global oil prices and evidence that some traders and shippers are evading the cap, the first signs of enforcement are appearing 10 months after the price limit was imposed in December.

But sanctions advocates say the crackdown needs to go further to really hurt Russia.

Reducing oil profits “is the one thing that hits Russian macroeconomic stability the most,” said Benjamin Hilgenstock, senior economist at the Kyiv School of Economics, which advises the Ukrainian government.

Oil income is the linchpin of Russia’s economy, allowing President Vladimir Putin to pour money into the military while avoiding worsening inflation for everyday people and a currency collapse.

Moscow’s ability to sell more to the world than it buys means it’s weathering sanctions far better than expected. Its economy will grow this year while Germany’s shrinks, the International Monetary Fund estimates.

Still, Russia’s main source of income is at risk from stepped-up enforcement. The U.S. Treasury Department sanctioned two ship owners last week, while U.K. officials are investigating violations.

Since the invasion began, oil sanctions have cost Russia $100 billion through August, said an international working group on sanctions at Stanford University. But most of that, economists say, stems from Europe’s ban on Russian oil, which cost Moscow its main customer.

“There are serious problems with the (price cap) policy, but it can work,” Hilgenstock said. “With some improvements, it can be very effective.”

Vessels owned or insured by Western nations “persisted in loading Russian oil at all ports within Russia” in recent weeks as prices rose above the cap, the Helsinki-based Center for Research on Energy and Clean Air said in a report last week. “These occurrences serve as compelling evidence of violations against the price cap policy.”

Russia’s oil income rose in September to some 200 million euros ($211 million) a day as global prices increased, the think tank said. Less oil available worldwide — with Saudi Arabia and Russia cutting production — pushed prices for Moscow’s key export grade crude to $74.46 last week, S&P Global Platts said. It’s been above $60 since July 11.

The price cap is meant to limit what Russia can earn without taking its supplies off the market. Doing that threatens a shortage that could drive up fuel costs and inflation in the U.S. and Europe.

It relies on a key fact of the shipping industry: many vessel owners, traders and most insurers are based in Europe or the Group of Seven major democracies that imposed the price cap. That puts those companies within reach of sanctions.

To comply, shipping companies need to know the price of Russia’s oil. The cap, however, requires only a good-faith disclosure on a simple, one-page document with the names of the parties and the price. The actual sales contracts don’t have to be revealed.

And that, analysts say, has been an invitation for unscrupulous sellers to fudge — and for some shippers to adopt a see-no-evil approach.

Suspicions about evasion grew when analysts noticed that oil from the Russian port of Kozmino on the Pacific Ocean — responsible for a relatively small share of Russia’s exports — was trading well above the cap. That was even though many of the tankers stopping there were Western-owned, primarily Greek.

There was little sign of enforcement action until last week, when the U.S. Treasury Department blocked a tanker owner in the United Arab Emirates and another in Turkey from dealings in the U.S. They’re accused of carrying Russian oil priced at $75 and $80 per barrel while relying on U.S.-connected service providers.

U.S. officials have warned insurers away from vessels that appear suspicious, a senior Treasury official told reporters last week. The department also issued recommendations to scrutinize transport costs and watch for red flags of evasion.

The U.K. Treasury says it is “actively undertaking a number of investigations into suspected breaches of the oil price cap.”

There’s another opportunity to sidestep the cap: the price is set as oil leaves Russia, not what’s paid by a refinery in, say, India. The oil may be bought and sold several times by Russian-affiliated trading companies in countries not participating in sanctions.

Excessive “transportation costs” may be added. The difference to the end price is pocketed by traders and stays in Russian hands, analysts say.

“The problem is that no one really has any oversight as to what happens after the point of loading,” said Viktor Katona, lead crude analyst at data and analytics group Kpler. “And there’s a reason why the shippers haven’t really complained or haven’t flagged any issues with the oil price cap — because it’s very easily circumvented.”

Russia’s top energy official, Deputy Prime Minister Alexander Novak, told Radio Business FM on Oct. 13 that the cap was “not only ineffective, but harmful; it can completely distort the entire market and has only negative consequences, including for consumers.”

Russia does not recognize the cap, and a decree by Putin forbids its inclusion in sales agreements, Novak said.

U.S. officials, on the other hand, point to the losses it has inflicted on Moscow when combined with Europe’s ban on Russian oil.

That boycott forced exporters to send oil on monthlong voyages to Asia, instead of dayslong trips to Europe — essentially doubling Russia’s need for expensive shipping services.

Another cost is the “shadow fleet” of used tankers that Russia bought to dodge sanctions. It has only a third of the vessels it would need to completely sanctions-proof its oil shipments, said Craig Kennedy, an associate at Harvard’s Davis Center for Russian and Eurasian Studies.

That makes it hard for Russia to completely avoid Western-based shipping services.

Combined with the EU oil ban, the price cap has added $35 per barrel in costs for Russian exporters, U.S. officials say — money that doesn’t go to buy weapons and military equipment.

“The price cap is working,” says Nataliia Shapoval, vice president for policy research at the Kyiv school.

But Western allies “should take really urgent measures” to push oil from Russia’s shadow fleet back to mainstream shipping, Shapoval said.

To do that, the Stanford sanctions group says countries should demand proof of Western insurance before letting vessels pass chokepoints — now only recommended by the U.S. Treasury. Tanker owners also could be forced to take shipments only from approved oil traders based in sanctioning countries.

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FRANKFURT, Germany (AP) — Western governments have agreed to cap the price of Russia’s oil exports in an attempt to limit the fossil fuel earnings that support Moscow’s budget, its military and the invasion of Ukraine.

The cap is set to take effect Monday, the same day the European Union will impose a boycott on most Russian oil — its crude that is shipped by sea. The EU reached a deal for a $60-per-barrel threshold Friday, and the Group of Seven nations and Australia signed off on the deal later in the day.

The twin measures could have an uncertain effect on the price of oil as worries over lost supply through the boycott compete with fears about lower demand from a slowing global economy.

Here is what to know about the price cap, the EU embargo and what they could mean for consumers and the global economy:

WHAT IS THE PRICE CAP AND HOW WOULD IT WORK?

U.S. Treasury Secretary Janet Yellen has proposed the cap with other Group of 7 allies as a way to limit Russia’s earnings while keeping Russian oil flowing to the global economy. The aim: hurt Moscow’s finances while avoiding a sharp oil price spike if Russia’s oil is suddenly taken off the global market.

Insurance companies and other firms needed to ship oil would only be able to deal with Russian crude if the oil is priced at or below the cap. Most insurers are located in the EU or the United Kingdom and could be required to participate in the cap.

HOW WOULD OIL KEEP FLOWING TO THE GLOBAL ECONOMY?

Universal enforcement of the insurance ban, imposed by the EU and U.K. in earlier rounds of sanctions, could take so much Russian crude off the market that oil prices would spike, Western economies would suffer, and Russia would see increased earnings from whatever oil it can ship in defiance of the embargo.

Russia, the world’s No. 2 oil producer, has already rerouted much of its supply to India, China and other Asian countries at discounted prices after Western customers shunned it even before the EU ban.

WHAT EFFECT WOULD DIFFERENT CAP LEVELS HAVE?

A $60 cap will not have much impact on Russia’s finances, said Simone Tagliapietra, an energy policy expert at the Bruegel think tank in Brussels. That “will almost go unnoticed,” he said, because it would be near where Russian oil is already selling.

Russian Urals blend sells at a significant discount to international benchmark Brent and fell below $60 for the first time in months this week on fears of reduced demand from China due to outbreaks of COVID-19.

“Up front, the cap is not a satisfying number,” Tagliapietra said, but it could prevent the Kremlin from profiting if oil prices suddenly shoot higher and the cap bites.

“The cap might be lowered over time if we want to increase the pressure on Russian President Vladimir Putin,” he said. “The problem is: We have already spent a lot of months waiting for a measure to dent” Putin’s oil profits.

If the cap had been as low as $50, it would cut into Russia’s earnings and make it impossible for Russia to balance its state budget, with Moscow believed to require around $60 to $70 per barrel to do that, its so-called “fiscal break-even.”

However, a $50 cap would still have been above Russia’s cost of production of between $30 and $40 per barrel, giving Moscow an incentive to keep selling oil simply to avoid having to cap wells that can be hard to restart.

Robin Brooks, chief economist at the Institute for International Finance in Washington, tweeted last week that a $30 cap would “give Russia the financial crisis it deserves.”

The wrangling over where to set the cap highlighted the disagreement on which goal to pursue: hurting Russia’s finances or taming inflation, with the U.S. coming down on the side of controlling price increases, said Maria Shagina, a sanctions expert at the International Institute for Strategic Studies in Berlin.

With Monday’s deadline looming, she said that “$60 is better than not agreeing at all. They can obviously revise it later on to reflect conditions on the market … and tighten it.”

WHAT IF RUSSIA AND OTHER COUNTRIES WON’T GO ALONG?

Russia has said it will not observe a cap and will halt deliveries to countries that do. Russia could retaliate by shutting off shipments in hopes of profiting from a sharply higher global oil price on whatever it can sell around the sanctions.

Buyers in China and India might not go along with the cap, while Russia or China could try to set up their own insurance providers to replace those barred by U.S., U.K. and Europe.

Russia also could sell oil off the books by using “dark fleet” tankers with obscure ownership, as have Venezuela and Iran. Oil could be transferred from one ship to another and mixed with oil of similar quality to disguise its origin.

Even under those circumstances, the cap would make it “more costly, time-consuming and cumbersome” for Russia to sell oil around the restrictions, Shagina said.

The greater distances involved in shipping oil to Asia means up to four times more tanker capacity is needed — and not everyone will take Russian insurance.

“You need to tap into this dark fleet, and it’s not limitless,” she said. “Iran and Venezuela are using it, rather effectively, but you might face competition with the same targets. … This cat-and-mouse game is always inherent in sanctions mechanisms.”

WHAT ABOUT THE EU EMBARGO?

Russian producers likely won’t be able to reroute all their oil from Europe, formerly their biggest customer, and some will likely be lost to the global market — at least at first.

Analysts at Commerzbank say the EU embargo and cap together could result in “a noticeable tightening on the oil market in early 2023” and expect the price of international benchmark Brent to climb back to $95 per barrel in coming weeks. On Friday, Brent slid to $85.48 a barrel.

The biggest impact from the EU embargo may not come Monday but on Feb. 5, when Europe’s additional ban on refinery products made from oil — such as diesel fuel — come into effect.

Europe still has many cars that run on diesel. The fuel also is used for truck transport to get a huge range of goods to consumers and to run agricultural machinery — so those higher costs will be spread throughout the economy.

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WASHINGTON (AP) — U.S. officials celebrated in early September when top allies agreed to back an audacious, never-before-tried plan to clamp down on Vladimir Putin’s access to cash as he wages war on Ukraine.

The idea sounded simple enough: The countries would pay only cut-rate prices for Russian oil. That would deprive Putin of money to keep prosecuting his war in Ukraine, but also ensure that oil continued to flow out of Russia and helped to keep global prices low.

A month later, the Group of Seven, representing some of the world’s leading economies, is still figuring out how to execute the plan — a far more complex task than it might seem at first blush — and the Dec. 5 deadline to marshal participants is fast approaching.

In the meantime, the war grinds on. The Kremlin is mobilizing 300,000 more troops to join the invasion of Ukraine and Putin has annexed four Ukrainian regions after Kremlin-orchestrated referendums that the West denounced as shams.

And while the U.S. and European countries have levied thousands of financial and diplomatic sanctions on Russia, including recently announced penalties, Treasury leaders say a price cap on oil could deliver the most effective blow to Russia’s economy, undermining its greatest revenue source.

Pushed by Treasury Secretary Janet Yellen, the price cap plan is testing the bounds of statecraft and capitalism. Yellen made her reputation as a Federal Reserve chair who helped steer the U.S. into the longest expansion in its history. Now she’s trying to use global energy markets as a vise to stop a war and keep oil prices from rushing upward this winter.

Yellen and her team at Treasury have been lobbying their international counterparts on the price cap since at least May. The U.S. has already blocked Russian oil imports, which were small to begin with.

“This is an entirely new way to use financial measures against a global bully,” Elizabeth Rosenberg, Treasury’s head of Terrorist Financing and Financial Crimes, said at a recent congressional hearing.

“A price cap coalition requires unprecedented coordination with international partners, as well as close partnership with global maritime industries, and exceptional resolve in the face of hostile Russian bluster and threats, including the risk that Russia may seek to retaliate,” Rosenberg said.

The risks of this new form of economic warfare are immense to the global oil supply. If it fails or Russia retaliates by stopping the export of oil, then energy prices worldwide could skyrocket. U.S. consumers could feel the ramifications in another spike in gasoline prices.

“I don’t have a crystal ball. I don’t know exactly what Russia will do here. There are a lot of different options,” Ben Harris, Treasury’s assistant secretary for economic policy, said during a recent Brookings Institution presentation. He added: “The price cap provides an opportunity for a bit of a release valve and the hope that these Russian barrels will find the market, but at a reduced price.”

The Dec. 5 deadline for setting the price for discounted oil comes just before a year-end wider European embargo on seaborne Russian crude oil and a complete ban on shipping insurance designed to prevent Russian oil from reaching non-European buyers. The embargo and insurance ban could eliminate up to 4 million barrels a day from the world’s daily supply of petroleum, a loss of roughly 4%.

Treasury’s hope is that the price cap kicks in first and allows some of that oil to keep flowing via exceptions to the embargo and the insurance ban, albeit at prices lower than market rates.

While Treasury officials and leading economists express confidence that the plan will work — and already is working — some oil analysts are wary of trying to implement it before winter, in a global economy already scarred by supply shocks, and a Europe facing fast-rising inflation.

The unknowns are too many, they say.

“The wildcard factor to me is what the Russians do, because the Russians have made abundantly clear that they do not want to play along with price caps,” said Helima Croft, global head of commodity strategy at RBC Capital Markets.

“We should prepare ourselves at least,” she said, “that they may withhold oil.”

Ed Morse, head of commodities research at Citi Group, said at the Brookings Institution recently: “It’s an experiment that’s never been done in world history. I think it is a poor judgment call to do this at this time.”

Oil is the Kremlin’s main pillar of financial revenue and has kept the Russian economy afloat so far in the war despite export bans, sanctions and the freezing of central bank assets that began with the February invasion.

Before the war, Russia exported roughly 5 million barrels of oil per day as one of the world’s biggest oil exporters. That figure — accounting for roughly 9% of the world’s crude exports — has largely been unchanged despite all the sanctions.

Russia has vowed to take retaliatory measures to offset the impact of the price cap. Last week, Kommersant, a Russian business newspaper, reported that the Kremlin is considering raising $50 billion in additional revenue from taxes on exported energy, in response to the plan.

Analysts are hopeful the Russians are bluffing. Deutsche Bank recently assigned a “low probability” to Russia stopping its exports and cut its forecast for the price of crude by 10%. The German bank cited the U.S. Treasury’s announcement that India could have flexibility to buy from non-EU providers if it doesn’t join the price cap coalition, among other factors.

And while it’s assumed China and India won’t be part of an official coalition on the price cap, lower prices paid to Russia by these nations would help accomplish the coalition’s goal, Treasury officials say, getting more oil on the market with less revenue for the Kremlin. Already, Russia is locking in long-term contracts to limit the loss of potential oil revenues.

Raoul LeBlanc, vice president of energy at S&P Global Commodity Insights, said in some ways the discounts Russia is already providing countries show that a price cap could work.

LeBlanc said the complete loss of Russian oil on the global marketplace “would be catastrophic to the world economy” and losses would most heavily affect Latin America and much of South Asia.

Many European countries are already seeing major impacts of the war on their economies without a price cap in effect. The Organization for Economic Cooperation and Development last week said the global economy is set to lose $2.8 trillion in output in 2023 because of the war.

On other energy matters, European Union energy ministers on Friday levied a tax on fossil fuel companies’ windfall profits, but could not agree on a natural gas price cap.

Treasury is navigating a host of tricky questions as it works to implement the oil price cap plan. Among them: figuring out the size of the discount the G-7 and others would force on Russian oil, how the price cap would interact with the coming embargo and insurance ban, how companies would conduct their business as they try to avoid sanctions and how to stop Putin from getting around any cap.

Ben Cahill, a senior fellow at the Center for Strategic and International Studies, said he believes the price cap is “better than the status quo” — the expected European embargo on oil and ban on maritime insurance. But, Cahill adds, it will create complexities in the market that could drive up the cost of doing business.

“It’s a big gamble,” he said.

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BRUSSELS (AP) — The European Union’s groundbreaking decision to ban nearly all oil from Russia to punish the country for its invasion of Ukraine is a blow to Moscow’s economy, but its effects may be blunted by rising energy prices and other countries willing to buy some of the petroleum, industry experts say.

European Union leaders agreed late Monday to cut Russian oil imports by about 90% over the next six months, a dramatic move that was considered unthinkable just months ago.

The 27-country bloc relies on Russia for 25% of its oil and 40% of its natural gas, and European countries that are even more heavily dependent on Russia had been especially reluctant to act.

European heads of state hailed the decision as a watershed, but analysts were more circumspect.

The EU ban applies to all Russian oil delivered by sea. At Hungary’s insistence, it contains a temporary exemption for oil delivered by the Russian Druzhba pipeline to certain landlocked countries in Central Europe.

In addition to retaining some European markets, Russia could sell some of the oil previously bound to Europe to China, India and other customers in Asia, even though it will have to offer discounts, said Chris Weafer, CEO at consulting firm Macro-Advisory.

“Now, for the moment, that’s not financially too painful for Russia because global prices are elevated. They’re much higher than last year,” he said. “So even Russia offering a discount means that it’s probably selling its oil for roughly what it sold for last year also.”

He noted that “India has been a willing buyer” and “China’s certainly been keen to buy more oil because they’re both countries who are getting big discounts on global market prices.”

Still, Moscow has traditionally viewed Europe as its main energy market, making Monday’s decision the most significant effort yet to punish Russia for its war in Ukraine.

“The sanctions have one clear aim: to prompt Russia to end this war and withdraw its troops and to agree with Ukraine on a sensible and fair peace,” German Chancellor Olaf Scholz said.

Ukraine estimated the ban could cost Russia tens of billions of dollars.

“The oil embargo will speed up the countdown to the collapse of the Russian economy and war machine,” Foreign Minister Dmytro Kuleba said.

Ukrainian President Volodymyr Zelenskyy said in a video address that Ukraine will be pressing for more sanctions, adding that “there should be no significant economic ties left between the free world and the terrorist state.”

Simone Tagliapietra, an energy expert and research fellow at the Brussels-based think tank Bruegel, called the embargo “a major blow.”

Matteo Villa, an analyst at the ISPI think tank in Milan, said Russia will take a pretty significant hit now but cautioned that the move could eventually backfire.

“The risk is that the price of oil in general goes up because of the European sanctions. And if the price goes up a lot, the risk is that Russia starts to earn more, and Europe loses the bet,” he said.

Like previous rounds of sanctions, the oil ban is unlikely to persuade the Kremlin to end the war.

Moscow seized on the new sanctions to try to rally public support against the West, describing it as bent on destroying Russia.

Dmitry Medvedev, the deputy head of Russia’s Security Council who served as the country’s president, said the oil ban aims to reduce the country’s export earnings and force the government to scale down social benefits.

“They hate us all!” Medvedev said on his messaging app channel. “Those decisions stem from hatred against Russia and against all of its people.”

Russia has not shied away from withholding energy to get its way. Russian state energy giant Gazprom said it is cutting off natural gas to Dutch trader GasTerra and Denmark’s Oersted company and is also stopping shipments to Shell Energy Europe that were bound for Germany. Germany has other suppliers, and GasTerra and Oersted said they were prepared for a shutoff.

Gazprom previously stopped the flow to Bulgaria, Poland and Finland.

Meanwhile, the EU is urging other countries to avoid placing trade barriers on farm products as Russia’s war increases the risks of a global food crisis.

Zelenskyy has said Russia has prevented the export of 22 million tons of Ukrainian grain, much of it meant for people across the Middle East and Africa. He accused Moscow of “deliberately creating this problem.”

Russian oil delivered by sea accounts for two-thirds of the EU’s oil imports from Moscow. In addition to the EU cutoff of such imports, Germany and Poland have agreed to stop using oil from the northern branch of the Druzhba pipeline.

Agreeing on sanctions against Russian natural gas is likely to prove much tougher because it represents a larger percentage of Europe’s energy mix.

“The very loud and clear message that Moscow will hear is that it will be near impossible for the European Union to get any agreement on blocking gas because gas will not be as easily replicated from other sources in Europe as oil will be,” Weafer said.

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NEW YORK (AP) — With Russia intensifying its war on Ukraine, killing civilians and triggering a mass refugee crisis, President Joe Biden on Tuesday announced a U.S. ban on imported Russian oil. Critics of Russia have said that sanctioning its energy exports would be the best — perhaps only — way to force Moscow to pull back.

A full embargo would be most effective if it included European allies, which are also desperate to stop the violence in Ukraine and the danger Moscow poses to the continent. Yet it’s far from clear that all of Europe would take part in an embargo, though Britain announced Tuesday that it would phase out Russian oil imports by year’s end.

Unlike the United States, Europe is deeply reliant on energy it imports from Russia, the world’s second-largest crude oil exporter behind Saudi Arabia. While the U.S. could replace the relatively small amount of fuel it receives from Moscow, Europe could not, at least not anytime soon.

What’s more, any curbs on Russian oil exports could send already skyrocketing oil and gasoline prices ever higher on both continents and further squeeze consumers, businesses, financial markets and the global economy.

WHAT WILL HAPPEN WITH A U.S. BAN ON RUSSIAN OIL?

With gasoline prices in the U.S. surging ever higher, the Biden administration has faced growing pressure to impose further sanctions on Russia, including a ban on oil imports.

For now, a broad U.S.-European ban appears elusive. On Monday, German Chancellor Olaf Scholz made clear that his country, Europe’s largest consumer of Russian energy, has no plans to join in any ban. In response, U.S. Deputy Secretary of State Wendy Sherman hinted that the U.S. could act alone or with a smaller group of allies.

“Not every country has done exactly the same thing,” Sherman said, “but we have all reached a threshold that is necessary to impose the severe costs that we have all agreed to.”

DOES THE U.S. BAN ON RUSSIAN OIL HURT MOSCOW?

The impact on Russia would likely be minimal. The United States imports a small share of Russia’s oil exports and doesn’t buy any of its natural gas.

Last year, roughly 8% of U.S. imports of oil and petroleum products came from Russia. Together, the imports totaled the equivalent of 245 million barrels in 2021, which was roughly 672,000 barrels of oil and petroleum products a day. But imports of Russian oil have been declining rapidly as buyers shunned the fuel.

Because the amount of oil the U.S. imports from Russia is modest, Russia could potentially sell that oil elsewhere, perhaps in China or India. Still, it would probably have to sell it at a steep discount, because fewer and fewer buyers are accepting Russian oil.

If Russia were eventually shut off from the global market, rogue countries such as Iran and Venezuela might be “welcomed back” as sources of oil, said Claudio Galimberti, an analyst at Rystad Energy. Such additional sources could, in turn, potentially stabilize prices.

A team of Biden administration officials were in Venezuela over the weekend to discuss energy and other issues, White House press secretary Jen Psaki said. She said officials discussed a range of issues, including energy security.

“By eliminating some of the demand, we’re forcing the price of Russian oil down, and that does reduce revenue to Russia,” said Kevin Book, managing director at Clearview Energy Partners. “In theory, it is a way of reducing how much Russia earns on every barrel it sells, maybe not by a lot, but by some. The most important question is whether there’s going to be more pressure on the other side of the Atlantic.”

HOW COULD A RUSSIAN OIL BAN AFFECT PRICES?

News of the U.S. oil ban sent gasoline prices surging, with a gallon of regular selling for an average of $4.17 Tuesday.

A month ago, oil was selling for about $90 a barrel. Now, prices are surging close to $130 a barrel as buyers shun Russian crude. Refiners had already feared being left with oil they couldn’t resell if sanctions were imposed.

Shell said Tuesday that it would stop buying Russian oil and natural gas and shut down its service stations, aviation fuels and other operations there, days after Ukraine’s foreign minister criticized the energy giant for continuing to buy Russian oil.

Energy analysts warn that prices could go as high to $160 or even $200 a barrel if buyers continue shunning Russian crude. That trend could send U.S. gasoline prices past $5 a gallon, a scenario Biden and other political figures are desperate to avoid.

“A U.S. embargo on Russian oil is very politically attractive right now,″ said Morgan Bazilian, director of the Payne Institute at the Colorado School of Mines. Still, the same politicians now supporting the ban “will come back and hammer Biden if U.S. gasoline prices rise further as a result,″ he said.

ARE RUSSIAN IMPORTS ALREADY FALLING?

The U.S. oil industry has said it shares the goal of reducing reliance on foreign energy sources and is committed to working with the Biden administration and Congress. Even without sanctions, some U.S. refiners have severed contracts with Russian companies. Imports of Russian crude oil and products have tumbled.

“Our industry has taken significant and meaningful steps to unwind relationships” with Russia and voluntarily limit Russian imports, said Frank Macchiarola, senior vice president of the American Petroleum Institute, the oil and gas industry’s largest lobbying group.

Preliminary data from the U.S. Energy Department shows that imports of Russian crude dropped to zero in the last week in February.

WILL EUROPE GO ALONG?

A ban on Russian oil and natural gas would be painful for Europe. Russia provides about 40% of Europe’s natural gas for home heating, electricity and industry uses and about a quarter of Europe’s oil. European officials are seeking ways to reduce their dependence, but it will take time.

Britain’s business secretary, Kwasi Kwarteng, said his country will use the rest of the year to phase out its imports of oil and petroleum products to “give the market, businesses and supply chains more than enough time to replace Russian imports,” which account for 8% of U.K. demand.

Germany’s economy minister, Robert Habeck, on Tuesday defended the European decision so far to exempt Russian energy from sanctions.

“The sanctions have been chosen deliberately so that they impact the Russian economy and the Putin regime seriously, but they also have been chosen deliberately so that we as an economy and a nation can keep them up for a long time,” Habeck said. “Ill-considered behavior could lead to exactly the opposite.”

“We have maneuvered ourselves into an ever-greater dependency on fossil energy imports from Russia in the last 20 years,” Habeck said. “That is not a good state of affairs.”

Deputy Prime Minister Alexander Novak of Russia underscored that urgency, saying Moscow would have “every right” to halt natural gas shipments to Europe through the Nord Stream 1 pipeline to retaliate against Germany for halting the parallel Nord Stream 2 pipeline, which wasn’t yet operating. Novak added that “we have not taken this decision” and that “no one would benefit from this.” His statement marked a shift from Russia’s earlier assurances that it had no intention of cutting off gas to Europe.

Oil is easier to replace than natural gas. Other countries could increase production of oil and ship it to Europe. But much oil would have to be replaced, and this would drive up prices even more because the oil would likely have to travel farther.

Replacing the natural gas that Russia provides to Europe is likely impossible in the short term. Most of the natural gas Russia provides to Europe travels through pipelines. To replace it, Europe would mostly import liquefied natural gas, known as LNG. The continent doesn’t have enough pipelines to distribute gas from coastal import facilities to farther reaches of the continent.

In January, two-thirds of American LNG exports went to Europe, according to S&P Global Platts.

While U.S. oil and gas producers could drill for more natural gas, its export facilities are already operating at capacity. Expanding those facilities would take years and billions of dollars.

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