Oil prices slip as Biden stops short of sanctioning Russian crude

North American oil prices fell on Friday after U.S. President Joe Biden's government signalled it won't sanction Russian crude oil because of the impact it could have on pump prices.

Prices had spiked this week after Russia's decision to invade Ukraine.

The European oil benchmark, Brent crude, slid to $98 US on Friday after topping $105 a barrel a day earlier, its highest level since 2014. 

The North American benchmark, West Texas Intermediate, fell slightly to $92 after flirting with $100 on Thursday.

"The sanctions will not target the oil flows as we go forward," Amos Hochstein, the U.S. State Department's senior energy security adviser, said in an interview on Bloomberg Television.

Russia is the third-largest oil producer in the world, responsible for about 10 per cent of global supply. If the U.S. and European countries decided to invoke sanctions on Russian crude, global prices would likely rise.

Oil and natural gas is a major source of funding for Russia, accounting for about 36 per cent of the country's total revenue.

"Instead of holding signs saying, 'We stand with Ukraine,' wouldn't it be nice to say, 'We're not buying your oil, Russia?,'" said Martin Pelletier, a Calgary-based portfolio manager at TriVest Wealth Counsel.

"There's no way given the supply situation and the shortages and the growth in demand in Europe that they're going to want to not take those hydrocarbons from Russia," he said.

WATCH | Biden lays out U.S. sanctions on Russia:

Europe is Russia's main market for its oil and natural gas exports. Canada imports very little Russian oil.

While the Biden administration decided not to sanction Russian oil, the actions of the U.S. and Europe against other sectors may still have an impact on oil and gas exports. 

So far, the White House has implemented measures to isolate Russia from the global financial, tech and trade systems.

"The indirect effect of sanctions on the banking sector and the insurance sector may complicate Russia's ability to export crude, although probably not so much to Asian customers, more so to customers in Europe and the U.S.," said Robert Johnston, a special advisor on energy and climate to Eurasia Group based in Washington, D.C.