Biden weighs buying discounted Russian oil after EU embargo

Biden wants to buy cheap Russian crude after Europe approved the embargo

On March 8, 2022, Joe Biden banned imports of Russian oil, petroleum products, liquefied natural gas and coal. Three months later, with gasoline at around $4.5 per gallon —roughly 50% more than in May 2021— the same president acknowledges that Washington is studying buying Russian crude again, albeit at a discount. "There is a lot being considered about what can be done to buy the oil, but at a limited price," he told reporters, according to Bloomberg.

The sequence is telling. On Monday, European Union countries agreed to ban exports of Russian oil and petroleum products, with exceptions for Hungary, Slovakia and the Czech Republic, which may keep receiving crude through the Druzhba pipeline. The restrictions take effect in six months for oil and eight for refined products. The United States, which pushed Europe toward that embargo, is now keeping a back door open.

What Biden actually said about Russian oil

The president did not speak of a decision made, but of a hypothesis on the table. "The Russians would have an overwhelming need to sell it, and it would sell at a significantly lower price than what the market is generating now," he argued. The logic: if Europe stops buying, Moscow is left without buyers and accepts whatever it is offered. The problem is that the Kremlin has already responded. "Moscow is not going to sell its energy resources at a loss," said spokesman Dmitri Peskov, who admitted to logistical problems but ruled out giving crude away.

Biden also lowered expectations about his own room for maneuver. "The idea that we're going to be able to click a switch and bring down the cost of gasoline is not likely in the near term, nor is it with regard to food," he said. Translation: prices will not fall before the November midterm elections, which is exactly what worries his party.

The European calculation: paying more for Russian gas and buying it from the US

The paradox that has heated up the debate most is that of the middleman. If Washington buys Russian crude at bargain prices and Europe keeps the veto, the Old Continent ends up financing the very war it claims to fight, but paying more. Some argue that this Russian oil resold to Europe will arrive with a scandalous markup; others reply that crude is a global market and the origin gets diluted in the barrel.

The domestic damage in the United States has its own logic. There, the car is not a luxury: without it there is no life outside the big cities, distances are enormous and the rail network does not cover what it covers in Europe. That is why $4.5 gasoline hurts more than in Spain, and why the White House keeps an eye on November.

Why Russia is in less of a hurry than Washington thinks

Biden's thesis assumes Russia needs to sell, no matter what. Peskov's response points the other way: no rush, no discount. Russia has already been closing contracts in rubles and has stopped accepting certain currencies, which some read as the beginning of the end of dollar hegemony in energy trade. Others see more wishful thinking than reality there.

For now, the standoff remains open. The United States has not announced any purchase and Russia has not accepted any price. The only firm thing is the European timetable: six months to stop importing Russian crude, eight for refined products.

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Biden wants cheap Russian crude and Peskov says there will be none. In between, Europe approved an embargo that leaves it buying dearly what it used to buy nearby. The matter remains there, unresolved.