Against the background of the cooling of relations with Moscow and the pressures that the Nord Stream 2 issue exerts on Europe, the Americans have considerably increased purchases of Russian crude oil also in view of possible new sanctions.
Increase in imports
As communicated by the EIA (the US Energy Information Administration), US imports of Russian crude oil and refined products increased by 3.5% last year, reaching the highest levels of the last 10 years. Russia positioned itself first among the various suppliers, overtaking Saudi Arabia which significantly reduced exports to restore market equilibrium.
In 2020, Americans bought an average of 538,000 barrels a day from Russia, while 522,000 from Saudi Arabia. The biggest buyers are Valero and Exxon who bought 55 and 50 million barrels respectively. These two companies guarantee about half of the imports from Russia.
US refineries turned to Russia after Venezuelan crude was no longer available. And this is thanks to Donald Trump who in 2019 imposed sanctions on the state company Petroleos de Venezuela, effectively causing an interruption of the distribution chain.
The most affected were the factories in the Gulf of Mexico and the east coast including Citgo Petroleum, Valero Energy and Chevron. Americans do not buy crude oil from Russia, but the fuel oil necessary for the production of gasoline.
The situation was also complicated by the reduction of extractions within OPEC. Supplies from Saudi Arabia are now at an all-time low since 1985. And, according to experts, only fuel oil from Russia has allowed US refineries to continue their operations.
“With the loss of Venezuelan crude oil and the increase in the price of crude applied by the usual OPEC suppliers, the US has become the main consumer of Russian fuel oil,” says Adi Imsirovich, scientific advisor to the Oxford Institute for Energy Studies.
The shale crisis
The collapse of the shale market generated by the pandemic also had an impact. In the US, 13 million barrels a day were extracted, today 11.
The demand for hydrocarbons has collapsed as have the prices of raw materials. The number of gasification and drilling plants has significantly reduced, several companies have gone out of business. About 150 shale producers have filed for bankruptcy.
First of all, those already in difficulty before COVID went bankrupt: companies had to contract debts due to the serious lack of investments. In fact, since 2018, Wall Street has shown less and less interest in investing in shale because it believed that there was no profit margin given that most companies were at heavy losses.
In 2020, according to estimates by the IEA (International Energy Agency), investments have more than halved, reaching 45 billion dollars.
The IEA reports that shale mining in March dropped to 7.5 million barrels per day. There is a decreasing trend in 6 out of 7 mining basins: Anadarko, Bakken, Niobrara, Eagle Ford, Gainesville, Appalachian.
According to Fitch estimates, the shale market will not return to pre-crisis levels even in 2-3 years: producers will, in fact, still be committed to optimizing losses and return on investment rather than increasing extractions. .
An uncomfortable situation
Thus the US has found itself in an awkward position: as Bloomberg observes, the increased dependence on Russian crude is in total contradiction with the government’s energy policy. On the one hand, Washington is doing everything to prevent Europe from approving Nord Stream 2 and thus selling its gas. On the other hand, US refineries are buying more crude from Russia than ever before.
“The oil tankers docked at the Baytown (Texas) refineries are very similar to the many others that cross the Houston Ship Channel. But these carry an unusual commodity: Russian oil ”. “If Russia has become the key supplier of oil to the US, it is thanks to the ingenuity and expertise of the Kremlin to use Washington’s policy to its advantage.” “After all, Trump bragged that the US had become an energy superpower and that the country would no longer be dependent on enemy foreign suppliers,” oil market analyst Mark Finley.
Interestingly, Washington does not comment on the situation at all.
But the relentless rise in imports is a clear sign that the mantra of energy independence preached by former US President Donald Trump has had no effect.
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