Biden's oil ban stokes concerns over inflation

US President Joe Biden on Tuesday banned imports of Russian crude oil in retaliation for Moscow's military operation in Ukraine, a move that is expected to further increase surging oil prices in the US and add to inflation already at its fastest pace in 40 years.

News of the ban sent gasoline prices in the United States to their highest level ever recorded, with a gallon of regular gas selling for an average of $4.17 on Tuesday, up from $3.62 a month ago and $2.77 a year ago.

A month ago, oil was selling for about $90 a barrel; prices have since surged to around $130.

After sharp falls on Monday, Wall Street's benchmark stock indexes attempted a comeback in late trading on Tuesday, but failed to hold on to the gains.

Russian President Vladimir Putin reacted to Biden's announcement with a decree instructing his cabinet to produce a list of items to stop importing and exporting until the end of 2022. Russia also this week threatened to cut the flow of gas via the Nord Stream 1 pipeline to Europe in response to the West's financial penalties, Bloomberg reported.

A poll by The Wall Street Journal published on Tuesday showed people in the US overwhelmingly support a ban, with 79 percent favoring it and 13 percent opposed. The ban had support from 77 percent of Republicans and 88 percent of Democrats.

The newspaper's poll surveyed 529 registered voters from March 4-7 about their opinion on halting Russian energy imports.

The White House said the ban on new purchases took effect immediately, but the administration was allowing a 45-day "wind-down" for delivery under existing contracts.

Russia produces about 11 percent of the world's oil, or roughly 10.5 million barrels a day.

A ban by Russia on oil and natural gas would hurt Europe. Russia provides about 40 percent of Europe's natural gas for home heating, electricity and industry uses and about a quarter of Europe's oil.

'Game-changer'

Federal Reserve Chairman Jerome Powell said last week that the consequences of Russia's military operation in Ukraine could ultimately amount to a "game-changer".

"The risk of a policy error, and therefore a US recession, is rising quickly," Joseph LaVorgna, chief economist for the Americas at Natixis, said in a note to clients, The Wall Street Journal reported.

But David Bahnsen, chief investment officer of the Bahnsen Group, said in a note: "Surging oil prices can't singularly trigger a recession and it would take more than sky-high energy prices for the consumer impact to become recessionary."

Jason Furman, a Harvard professor and former top economic adviser to president Barack Obama, told NBC News: "The United States economy can fully handle any of the challenges associated with higher oil prices.

"But it will bring some challenges. We're going to have higher prices at the pump, and there's no way around that."

Claudio Galimberti, senior vice-president of analysis at Rystad Energy, said that if Russia were eventually shut off from the global market, countries such as Iran and Venezuela might be "welcomed back" as sources of oil. Such additional sources could, in turn, potentially stabilize prices, he told NBC News.