As President Biden's term nears its end, reports suggest he's contemplating further sanctions targeting Russia's energy sector. This move, while potentially strengthening President-elect Trump's negotiating position with Putin, could have significant global repercussions, particularly for energy prices and trade dynamics.

Experts, drawing on the impact of previous energy sanctions against Russia, warn that new measures could lead to a temporary surge in gas prices. The historical context of 2022, when natural gas prices escalated amidst rising tensions with Russia and peaked following the invasion of Ukraine, underscores this concern.

President Joe Biden (Brandon Bell)

The Federal Reserve Bank of St. Louis, in its analysis of existing sanctions, highlights the double-edged sword they represent. While diminishing Russia's revenue stream, these measures also impose costs on the sanctioning nations. A prime example is the global surge in diesel prices following the Ukraine invasion. With the U.S. and other nations halting Russian energy imports, refineries struggled to meet the heightened demand, as per the Federal Reserve Economic Data (FRED). FRED data reveals a staggering 109% year-over-year increase in the Producer Price Index (PPI) for diesel between June 2021 and June 2022, though prices have since subsided.

The American Enterprise Institute (AEI) points out that sanctions can trigger significant shifts in oil export patterns, leading to less efficient trade routes and compelling sanctioned nations like Russia, Iran, and Venezuela to offer crude oil at discounted prices.

Russian President Vladimir Putin (Gavriil Grigorov)

While acknowledging the potential for increased oil prices, some analysts argue that the conclusion of the election removes a key obstacle for the Biden administration. Edward Fishman, a senior research scholar at Columbia University’s Center on Global Energy Policy, suggests that the prior concerns about escalating gas prices and inflation, which constrained sanctions policy, are now less pressing. This comes on the heels of newly imposed U.S. sanctions against Russian entities and individuals linked to the Nord Stream 2 pipeline project.