After Russia started to invade Ukraine a few days ago, the White House announced that the United States and allies agreed to block select Russian banks from SWIFT, the global financial messaging system.

In a joint statement with leaders of the European Commission, France, Germany, Italy, the United Kingdom, Canada, the officials said Russia being excluded from SWIFT ensures “that these banks are disconnected from the international financial system and harm their ability to operate globally.”

The announcement comes after President Joe Biden on Thursday told reporters that the penalties from the latest round of sanctions against Russia are “maybe more consequence than SWIFT.”  

What does it mean for Russia to be kicked out of the SWIFT banking system? Here’s what you need to know: 

What is the SWIFT financial system?

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. It is a global messaging system connecting thousands of financial institutions around the world.

How is Russia export affected?  

The top exports of Russia are Crude Petroleum ($10.1B), Commodities not elsewhere specified ($5.87B), Refined Petroleum ($5.67B), Gold ($1.85B), and Coal Briquettes ($1.69B).

Russia exports around 4-5 million barrels per day (bpd) of crude and another 2-3 million bpd of refined products. 

The main buyers are China, the European Union, South Korea, India and Japan.

The global oil market was thrown into chaos on Thursday after Russia invaded Ukraine, with top buyers of Russian oil struggling to secure guarantees at Western banks or find ships to take crude from one of the world's largest producers.