Russian crude was sold at a discount, and U.S. crude traders went on a buying spree. The White House said it would not ban U.S. companies from buying Russian oil “because it would harm American consumers.”
The Russian-Ukrainian conflict has entered its sixth day, and European and American countries have launched a number of sanctions against Russia, including targeting the Nord Stream 2 natural gas pipeline and kicking some Russian banks out of the SWIFT system.
Crude oil exports from Russia, a major producer, have been affected amid ongoing tensions, sending oil prices soaring.
On Tuesday, the price of U.S. WTI crude oil futures exceeded $109 a barrel, a seven-year high, while Brent oil stood at the $110 mark.
at the same time,The U.S. government has said it is considering releasing reserves without banning U.S. companies from buying Russian crude.
U.S. buys Russian crude oil on spree
U.S. crude traders have bought a significant amount of Russian crude in the past eight months.Crude shipments from Russia to the U.S. rose in February to their highest level since June last year, with more than 100,000 barrels a day of Russian crude shipped from Pacific coast terminals to U.S. refineries on average, the data showed.
About 8 percent of U.S. oil and refined product imports last year, or an average of about 670,000 barrels per day, came from Russia, Houston-based Lipo Petroleum Corp said, citing data from the U.S. Energy Information Administration (EIA). Among them, crude oil accounted for about 3%, that is, about 200,000 barrels of crude oil per day in the United States came from Russia last year.
On March 1, White House press secretary Psaki said at a briefing that the U.S. government would not restrict the purchase and sale of crude oil and natural gas by U.S. companies, but did not rule out the possibility of a future “ban”.
The United States also found a good argument for its continued purchase of Russian energy: “Because Europe is dependent on Russian crude oil.”
It is intriguing that within 24 hours after Putin recognized the independence of eastern Ukraine on February 22, it was the United States and its allies who frantically bought Russian oil and gas products.
The U.S. bought 3.5 million barrels of Russian crude, worth $350 million, while other U.S. allies bought $250 million of Russian natural gas, according to Bloomberg.
Why is the U.S. buying Russian crude?
Why does the US want to buy Russian crude oil? There is an immediate reason: buyers of Russian crude are facing difficulties in making payments and supplying ships, and in this situation,Russian crude oil sold for cheap!
Wall Street News said in the article “Without a Suitable Buyer, the Discount of Russian Crude Oil Hits a Record”,The price of Russian Urals crude fell a record $9.80, a 10-fold discount from the past few years.
Under the current European and American sanctions, the life of Russian crude oil is indeed difficult. Three buyers of Russian crude have been unable to issue letters of credit from Western banks to pay for their purchases, according to Reuters. Banks are refusing to provide letters of credit, crude oil traders are afraid to wait and see for fear of sanctions, and tanker owners try to avoid shipping Russian crude or commodities as much as possible.
In addition to the direct factor of price cuts, there is an objective reason for the US to buy Russian crude oil: most of the crude oil for US refineries is imported from overseas.
Although the United States exports millions of barrels of crude oil from the Gulf Coast every day, because there are no pipelines connecting the east and west coasts, and the size of ships transporting goods between US ports is limited, if the United States uses small ships to transport, the transportation costs are higher, and refineries Basically unprofitable.
Russia is one of the world‘s largest energy exporters. As far as crude oil is concerned, it supplies nearly 7.5 million barrels of crude oil and crude oil products every day. The U.S. averaged more than 100,000 barrels a day of crude oil imports from Russia last week.
In general, the United States is more dependent on overseas imports of crude oil, and Russia accounts for a large share of U.S. crude oil imports, which makes it impossible for the United States to directly announce sanctions on Russian energy.
Therefore, the United States said that in order to support Ukraine and unite NATO allies, it will impose severe sanctions on Russia, and also said that it will not sanction Russian crude oil.Most of them are for their own benefit.
Last Friday, a U.S. State Department official said publicly:
The U.S. government will not sanction Russian crude oil. Because it will hurt American consumers, not Putin.
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