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Will gasoline prices fall? This is how the latest sanctions on US oil companies could affect your pocket

Here’s how recent sanctions targeting Russian energy resources could impact your wallet.

Precios del barril de petróleo Texas y Brent, 2 de julio: ¿Cuánto cuesta y a cuánto se cotiza?
POOL NewREUTERS

As one of its final acts, the Biden administration’s Treasury Department has enacted another round of sanctions on Russian energy assets to further limit the country’s ability to export its energy resources to the global market. These actions were taken after uncovering evidence of an alleged “sanctions evasion scheme” involving collaboration between Russia and the People’s Republic of China (PRC) to facilitate cross-border payments for sensitive goods.

As a result of the sanctions, the Treasury Department has added “a Kyrgyz Republic-based financial institution that coordinated with Russian officials and a U.S.-designated bank” to its sanctions list.

Since the escalation of the Russia-Ukraine war in 2022, the U.S. has imposed an import ban on Russian energy assets, raising the question of whether these additional sanctions will affect petroleum and gas prices domestically.

Given that Russian energy resources are already subject to an import ban, the primary way these sanctions could influence U.S. prices is if they increase costs for energy imports from other countries, such as China. However, the U.S. does not import oil from China, and China remains an importer of U.S. petroleum. As of March 2024, according to the U.S. Energy Information Administration (EIA), China accounted for around 10% of all U.S. energy exports.

The EIA releases a short-term energy outlook, which includes forecasted gas prices

Although the sanctions were announced after the EIA published its short-term energy outlook, the trends outlined in the report suggest that even if the sanctions drive global energy prices higher, U.S. gas prices are unlikely to rise significantly beyond current forecasts. According to the report published on January 14, 2025, the EIA expects the average price of a gallon of gas to fall to $3.20 in 2025, down from $3.30 in 2024. Looking ahead to 2026, the EIA forecasts gas prices will continue to decline, with an average of around $3.00 per gallon.

The EIA likely incorporated the election of President-elect Trump into its models, but prior reports showed similar trends driven by the continued stabilization of global energy prices over the past two years.

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