Russian crude oil was sold at a discount, and U.S. crude oil traders were buying aggressively. The White House said it would not ban U.S. companies from buying Russian oil “because it would harm American consumers.”
As the conflict between Russia and Ukraine enters its sixth day, European and American countries have launched multiple sanctions against Russia, including targeting the Nord Stream 2 natural gas pipeline and kicking some Russian banks out of the SWIFT system.
Amid ongoing tensions, Russia, a major oil producer, has affected its crude oil exports, causing oil prices to soar.
On Tuesday, U.S. WTI crude oil futures prices exceeded $109 a barrel, hitting a seven-year high, while Brent oil stood at the $110 mark.
At the same time, the U.S. government said it was considering releasing reserves without banning U.S. companies from buying Russian crude oil.
U.S. buys Russian crude oil aggressively
U.S. crude oil traders have purchased large quantities of Russian crude oil in the past eight months. Data show that in February of this year, crude oil shipments from Russia to the United States rose to the highest level since June last year, with an average of more than 100,000 barrels of Russian crude oil being transported from Pacific Coast terminals to U.S. refineries every day.
About 8% of U.S. imports of petroleum and refined products last year, or an average of about 670,000 barrels per day, came from Russia, Houston-based Libo Oil said, citing data from the U.S. Energy Information Administration (EIA). Among them, crude oil accounts for about 3%, that is, an average of about 200,000 barrels of crude oil per day in the United States last year came from Russia.
U.S. petroleum and refined product import share in 2021
On March 1, White House Press Secretary Psaki stated 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 “ban” in the future.
The United States also found a good excuse for its continued purchase of Russian energy: “Because Europe relies on Russian crude oil.”
What is intriguing is that within 24 hours after Putin recognized the independent status of the two eastern parts of Ukraine on February 22, it was the United States and its allies that frantically purchased Russian oil and gas products.
According to Bloomberg, the United States bought 3.5 million barrels of Russian crude oil worth US$350 million, and other US allies purchased US$250 million of Russian natural gas.
Why does the United States buy Russian crude oil?
Why does the United States want to purchase Russian crude oil on a large scale? There is a direct reason: buyers of Russian crude oil are facing many difficulties in payment and ship supply. Under this situation, Russian crude oil is sold cheap!
Under the current European and American sanctions, Russian crude oil is indeed having a hard time. According to Reuters, three buyers of Russian crude oil have been unable to open letters of credit from Western banks to pay for their purchases. Banks refused to provide letters of credit, crude oil traders were afraid of sanctions and chose to wait and see, while tanker owners also avoided transporting Russian crude oil or commodities as much as possible.
In addition to the direct factor of price reduction, there is another objective reason for the United States to purchase Russian crude oil: Most of the crude oil in American 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 U.S. ports is limited, if the United States uses small ships to transport goods, transportation costs are higher and refineries Basically unprofitable.
Russia is one of the world’s largest energy exporters. In terms of crude oil, it supplies nearly 7.5 million barrels of crude oil and crude oil products every day. The United States imported more than 100,000 barrels of crude oil from Russia per day on average last week.
Generally speaking, the United States relies more on overseas imports of crude oil, and Russia accounts for a large share of U.S. crude oil imports. This prevents the United States from directly announcing sanctions on Russian energy.
Therefore, while the United States stated that it would impose severe sanctions on Russia in order to support Ukraine and unite NATO allies, it also stated that it would not sanction Russian crude oil. Most of this was based on its own interests.
Last Friday, a U.S. State Department official publicly stated that the U.S. government would not sanction Russian crude oil. Because this will harm American consumers, not Putin.
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