/ world today news/ The Americans began to buy even larger volumes of Russian oil and fuel oil for the production of gasoline. Supplies have reached a ten-year high, the US Department of Energy has estimated. How is it that Washington is increasing its purchases of oil from one of its main geopolitical adversaries?
Buying Russian oil clearly goes against American energy doctrine, but Americans continue to buy it, and more with each passing year. Last year, imports of oil and petroleum products from Russia to the US reached the highest level since 2011, according to the US Department of Energy. On average, in 2020, Americans bought 538 thousand barrels per day from Russia. As a result, Russia became the second importer of oil and oil products in the US in terms of supplies, pushing Saudi Arabia into third place (538 thousand against 514 thousand barrels per day).
First place is taken by neighboring Canada. From there, Americans buy 3.2 million barrels per day (minus 5.4% compared to 2019).
The Americans began to increase imports of Russian raw materials in 2019 – in April of the same year, the figure exceeded 500 thousand barrels per day. Last year, the May-June supply volume fell due to strong restrictions on oil production under the OPEC+ agreement. But already in July, the Americans again began to buy more than 500 thousand barrels per day from Russia. As a result, for several years, the share of Russian oil in the total import of black gold increased from 0.5% to 7% in 2020.
Why do Americans buy Russian oil and oil products? Is there no other? It turns out that there really is no one else. Moreover, the US got itself into this geopolitical trap. “The main reason is clear. Trump imposed tough sanctions on Venezuela and there was a shortage of heavy oil for US refineries. Russia took advantage of this deficit. The market is global, traders go where they can sell profitably,” says Konstantin Simonov, head of the National Fund for Energy Security.
As a result, a paradoxical situation developed both economically and politically. On the one hand, the US has long ceased to be a major importer of oil. On the contrary, they started producing their own shale oil and managed to become the world’s major oil producer and exporter. On the other hand, they continue to depend on heavy oil imports from their political opponent Russia.
“This is due to the economics of US refineries, which have higher margins in refining heavy oils. This is how the independent processing industry in the USA is built,” explains Simonov. It is more profitable for the Americans to export their own light oil and process foreign heavy oil in their refineries.
It is curious that Russia does not sell crude oil to the US, but fuel oil. U.S. refiners blend Russian fuel oil with light grades to bring them up to parameters suitable for refining in refineries built before the U.S. shale boom.
“Really, no one has fuel oil in such volumes, because it is a very specific low-quality fuel. Unfortunately, our refining is not fully modernized and we have such a product. But then again, if we didn’t have fuel oil, we would be like Venezuela supplying crude viscous oil. It is important that we had and still have a competitive offer for the USA,” says Simonov. The United States has no alternative in heavy grades of oil because it has itself eliminated both Venezuela and Iran as sellers.
The economics of shipping Russian fuel oil to the US is most likely profitable, otherwise no one would buy it. “Against the background of the weakening ruble, Russian oil is becoming much more profitable than other producing countries,” notes Artyom Deev – analyst.
Last year, Valero was the largest importer of Russian oil to the US, buying almost 55 million barrels, followed by Exxon with almost 50 million barrels. According to customs data, these companies account for nearly 50% of the total imports of Russian oil into the United States.
It is curious to see how the US politically tries to play out this extraordinary story. “The Democratic Party now puts all the blame for everything on Trump: ‘Look what America has come to – the Russians, it turns out, are supplying oil to the US because of this person.’ Trump himself said back in January that now Biden will come with his “green” program, will collapse the American shale industry, and the Russians will seize the American market with their oil,” says Konstantin Simonov.
Although he says it’s hard to blame Trump. His task was to promote American oil in the export markets, and he successfully fulfilled it, eliminating competitors – Venezuela and Iran. “Overall, US oil is benefiting from this. But such a politically ironic situation appeared,” added the expert.
It is curious that literally last week it became known about the first deliveries to the USA of Russian ESPO light oil in the amount of more than 3 million barrels. Simonov is convinced that this is a one-time story. Because it makes no sense for the US to buy light oil from Russia when it has its own.
The deal may have come about because of low freight rates and low demand for the brand from independent Chinese refiners, partly due to an increase in the supply of cheap Iranian oil, Reuters analysts said. Russian ESPO is generally China-oriented and is popular among independent refiners in Shandong Province. These refineries are geographically located relatively close to production – delivery takes only three to four days.
As for Saudi Arabia, in recent years it has placed increasing emphasis on the more solvent Asian region. Last year, it became China’s largest oil supplier. There is a fierce battle between the Saudis and the Russians for the Chinese market.
“Saudi Arabia is increasing its supply to Asia-Pacific countries because the market volume there is larger than in the US, there are more consumers and the price parameters are more favorable. The Saudis follow the path of increasing their market share in Asia, therefore they additionally offer discounts to consumers, as a result the share of Arab oil in these markets is gradually increasing,” explains Deev.
Translation: V. Sergeev
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