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The fracking boom made America the world’s biggest oil producer a few years ago, but the U.S. until recently was still importing millions of barrels each day from other parts of the world, including Russia.

Now, the European Commission is banning imports of Russian coal, following reports of potential war crimes against civilians by Russian forces. Support is building for the bloc to introduce a phased-in embargo on Russian oil. 

Last month, the Biden administration said it would tap up to 180 million barrels of oil held in the Strategic Petroleum Reserve in a bid to ease high fuel prices. That release, about 1 million barrels a day for six months, would come from a stockpile of about 568 million barrels in government reserves. Several other Western nations also are set to release oil from their reserves.

The Biden administration also said on April 15 that it will resume oil leasing on federal lands, as it faces pressure to address soaring energy prices. Mr. Biden had called for ending such leases as a candidate and announced a moratorium on new leases the day he took office. 

Here is a look at why the U.S. was still importing Russian crude and where it had been going.

How much oil had the U.S. been importing from Russia?

The U.S. still consumes far more oil than companies extract domestically, requiring it to import some supplies. But it is less reliant on Russia’s oil than Europe and takes only a small portion of its imported crude from Russia.

America gets most of its crude imports from Canada, Mexico and Saudi Arabia. Smaller countries in Latin America and West Africa also typically send more crude to the U.S. than Russia had been sending.  

Share of U.S. imports of crude oil and petroleum

products, rolling 12-month periods, select countries

Share of U.S. monthly imports of crude oil and

petroleum products, January-December 2021

Canada

51.3%

Mexico

8.4

Russia

7.9

Colombia

2.4

Ecuador

2.0

Saudi Arabia

5.1

Saudi

Arabia

All other

countries

19.4

Brazil

1.7

Source: Energy Information Administration

Peter Santilli/THE WALL STREET JOURNAL

Share of U.S. imports of

crude oil and petroleum

products, rolling 12-month

periods, select countries

Share of U.S. monthly imports of crude oil and

petroleum products, January-December 2021

Canada

51.3

Mexico

8.4

Russia

7.9

Colombia

2.4

Ecuador

2.0

Saudi Arabia

5.1

Saudi

Arabia

All other

countries

19.4

Brazil

1.7

Source: Energy Information Administration

Peter Santilli/THE WALL STREET JOURNAL

Share of U.S. imports of crude oil and

petroleum products, rolling 12-month

periods, select countries

Share of U.S. monthly imports of crude oil and

petroleum products, January-December 2021

Canada

51.3%

Mexico

8.4

Saudi Arabia

Russia

7.9

Colombia

2.4

Ecuador

2.0

Saudi Arabia

5.1

All other

countries

19.4

Brazil

1.7

Source: Energy Information Administration

Peter Santilli/THE WALL STREET JOURNAL

Share of U.S. monthly imports of crude oil and

petroleum products, January-December 2021

Canada

51.3%

Mexico

8.4

Russia

7.9

Colombia

2.4

Ecuador

2.0

Saudi Arabia

5.1

All other

countries

19.4

Brazil

1.7

Share of U.S. imports of crude oil and petroleum

products, rolling 12-month periods, select countries

Saudi

Arabia

Source: Energy Information Administration

Peter Santilli/THE WALL STREET JOURNAL

Share of U.S. monthly imports of crude oil and

petroleum products, January-December 2021

Canada

51.3%

Mexico

8.4

Russia

7.9

Colombia

2.4

Ecuador

2.0

Saudi Arabia

5.1

All other

countries

19.4

Brazil

1.7

Share of U.S. imports of crude oil and petroleum

products, rolling 12-month periods, select countries

Saudi

Arabia

Source: Energy Information Administration

Peter Santilli/THE WALL STREET JOURNAL

About 8% of U.S. imports of oil and refined products, or about 672,000 barrels a day, came from Russia last year, said Andy Lipow, president of Lipow Oil Associates LLC in Houston, citing figures from the Energy Information Administration. Setting aside refined products, Russian oil alone made up roughly 3% of the nation’s imports, about 200,000 barrels a day. 

In mid-2021, U.S. imports of Russian crude hit the highest levels in about a decade, and had been trending higher in recent years, EIA data show. But Russian crude has never made up a large part of the U.S. oil supply system, Mr. Lipow said. 

Russian crude has never made up a large part of the U.S. oil supply system, but in mid-2021 U.S. imports of it hit the highest levels in about a decade.

Photo: Yegor Aleyev/Zuma Press

If the U.S. exports millions of barrels a day from the Gulf Coast, why was it importing Russian oil?

The Jones Act, passed a century ago, has effectively limited the size of vessels that are allowed to transport goods between U.S. ports. That has left oil buyers on the West Coast and East Coast effectively unable to get supplies shipped out of the Gulf Coast. 

The Gulf Coast, where oil companies shipped out about 3 million barrels a day in December, is connected by pipelines to the Permian Basin of West Texas and New Mexico and Cushing, Okla., the nation’s oil storage hub

It isn’t profitable for companies to ship oil from that region to the U.S. East and West Coasts by such small ships, so refiners along those coasts, lacking pipeline connections from the Permian and Cushing, mostly import it from overseas.

Russia’s attack on Ukraine helped push the price of oil to over $100 a barrel for the first time since 2014. Here’s how rising oil costs could further boost inflation across the U.S. economy. Photo illustration: Todd Johnson

Why do U.S. refineries need different varieties of crude?

The U.S. was buying Russian oil in part to feed refineries that need different grades of crude with a higher sulfur content to make fuel at top capacities. U.S. refineries were designed decades ago to use heavier grades of crude, often with higher levels of sulfur, when domestic supplies were lower.

In recent years, Russian crude has filled some of the gap around the world left behind by sanctions on Venezuela and Iran, which crippled the flow of that type and similar types of oil from those two countries to refiners in the Gulf Coast and elsewhere, Mr. Lipow said. 

An aerial view of storage tanks at a California refinery. Refineries on the East and West Coasts lack pipeline connections to the Permian Basin and the oil-storage hub of Cushing, Okla., so they mostly import their crude.

Photo: Bing Guan/Bloomberg News

Where was Russia’s oil going in the U.S.?

Roughly half of the oil that the U.S. had been importing from Russia was going to the West Coast, where refiners take crude deliveries from overseas largely because they aren’t connected by pipelines to the Permian Basin, the largest U.S. oil field. West Coast refiners had been taking Russian crude that is shipped out of the port of Kozmino on the country’s eastern side on the Pacific Ocean.  

Another quarter of that oil, roughly 50,000 barrels a day, was going to the East Coast, where refiners also aren’t connected by pipeline to the current top sources of U.S. oil production. The remaining quarter often ended up in the Gulf Coast, where Russia’s Urals grade of crude, which has a higher level of sulfur than most of the crude produced in the U.S., is considered profitable for use in refineries designed to run so-called sour grades of oil. 

What will U.S. refiners have to do to replace Russian crude?

While American fuel makers are not expected to see a significant disruption to operations without Russian imports, refineries that had used those barrels in places like Hawaii and Washington will likely have to pay higher prices for similar grades of crude from West Africa or the North Sea, partly due to longer transit times, Mr. Lipow said.

Russian crude that has ended up at refineries in the Gulf Coast, with its higher sulfur content, can be replaced with so-called medium sour barrels produced in the Gulf of Mexico, while East Coast refiners could get similar grades from other countries.

What might happen if the U.S. and other countries slow the flow of Russian crude?

Moves to hamper the flow of Russian crude had been interpreted by the oil market as another hit to already tight global supplies, which could further raise costs on consumers. The U.S. and other major oil-consuming nations said that they would release 60 million barrels from emergency stockpiles to boost global supplies. Still, oil and gasoline prices have remained high on concerns about tightening supplies.

U.S. oil prices have fallen in recent weeks after topping $120 a barrel last month but remained above the $100-per-barrel mark in recent days.

Some refiners had already been refusing to buy Russian oil due to the risk that they could be ensnared by sanctions, as the war triggered a reordering of the world’s oil flows. Global market participants were beginning to contemplate the previously unthinkable question of how they would cope without Russian oil supplies.

Write to Collin Eaton at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Source: WSJ

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