Ramifications of U.S. Ban on Russian Oil Imports Under Scrutiny

Ramifications of U.S. Ban on Russian Oil Imports Under Scrutiny

SUGAR LAND--March 11, 2022--Researched by Industrial Info Resources (Sugar Land, Texas)--Energy experts are weighing the economic consequences of the U.S. ban on imported Russian oil and refined products.

Below is a sampling of Industrial Info’s coverage this week related to these issues.

Does the U.S. Ban on Russia Fossil Fuels Even Matter?

March 10, 2022--Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--A U.S. ban on imported Russian natural gas and crude oil does little to the U.S. energy sector, though the global nature of the market means it will have sweeping ramifications.

U.S. President Joe Biden signed an executive order on Tuesday that bans the domestic import of Russian crude oil, natural gas and refined petroleum products.

"That means Russian oil will no longer be acceptable in U.S. ports, and the American people will deal another powerful blow to (Russian President Vladimir) Putin's war machine," he said.

The price of crude oil eclipsed $120 per barrel shortly after the announcement, but was retracing those steps early in the Wednesday session. Many buyers had already shunned Russian products, and Biden's order allows for a wind-down period of 45 days for existing contracts.

The U.S. economy, however, gets very little crude oil from Russia. In fact, the U.S. Department of Energy reported that, for the week ending February 25, the U.S. economy took in no Russian barrels at all.

From his Twitter handle, President Biden said the U.S. should strive for energy independence. The North American market does indeed look self-reliant based on our latest data. Even the oil-rich Middle East does little for the U.S. market, with the mighty Saudi Arabia ranking a distant third behind Mexico in terms of top suppliers. Canada by far is the largest source of foreign oil moving through the U.S. energy sector.

Commodity markets, however, do not recognize national borders. With inflation already running red hot, the U.S. economy will not be isolated from the collateral damage of sanctions. We see that today with record-high retail gasoline prices.

U.S. Industries Mull Consequences of Russian Oil Ban

March 9, 2022--With the U.S. ban on Russian oil imports made official on Tuesday, government and industry officials noted that the imports make up only a small portion of the U.S. energy diet. Even so, gasoline prices continued to climb.

President Joe Biden's executive order in retaliation for Russia's invasion of Ukraine prohibits imports of Russian crude oil, petroleum products, liquefied natural gas (LNG) and coal.

Last year, the U.S. imported an average of 209,000 barrels per day (BBL/d) of crude oil and 500,000 BBL/d of other petroleum products from Russia, according to the trade group American Fuel & Manufacturers (AFPM). Although Russian crude accounted for only 3% of U.S. crude oil imports and about 1% of total crude oil processed by U.S. refineries, Russian crude oil imports are more important to refineries on the West Coast and Gulf Coast, AFPM said on February 25. The trade group emphasized on March 3 it supports the suspension of all future purchases of crude oil and petroleum products from Russia.

Biden's executive order also bans new U.S. investment in Russia's energy sector and prohibits Americans from financing or enabling foreign companies that are making investment to produce energy in Russia.

During his announcement, Biden acknowledged Americans would continue to see rising gasoline prices, adding, "Defending freedom is going to cost."

As of Monday, U.S. pump prices averaged $4.06 per gallon, "a staggering 45 cents more than a week ago, 62 cents more than a month ago and $1.30 more than a year ago," the American Automobile Association said.

In an effort to ease some of the pain at the pump, the Biden administration has committed to releasing more than 90 million barrels of crude oil from the Strategic Petroleum Reserve this fiscal year, with an emergency sale of 30 million barrels announced last week.

U.S. LNG to the Rescue? Cheniere, Other Firms Add Liquefaction Capacity

March 8, 2022--Ongoing developments, both political and market-based, in the U.S. energy sector could accelerate its rise as a key source for global energy security. Among the possible beneficiaries is U.S. liquefied natural gas (LNG) developer?Cheniere Energy?(NYSE:LNG) (Houston, Texas), which said Monday it had signed an agreement with engineering firm?Bechtel Corporation?(Reston, Virginia) to start adding up to 10 million metric tons per year of liquefaction capacity to its terminal at Corpus Christi.

Cheniere said it entered into a "lump sum, turnkey, engineering, procurement and construction" contract with Bechtel to add up to seven mid-scale trains to Corpus Christi, each boasting a liquefaction capacity of about 1.49 million metric tons per year. That extra 10 million metric tons per year would add to the 15 million of existing capacity.

"Cheniere already has made a lot of progress recently in debottlenecking existing LNG infrastructure to boost output, along with speeding up the final commissioning of Train 6 well ahead of schedule," said Shane Mullins, Industrial Info's vice president of product development for the energy markets. "With Cheniere's help, the U.S. now has the world's largest LNG export capability."

Corpus Christi is typically the second-busiest LNG export terminal in the U.S., after Sabine Pass. For the seven-day period ending March 2, the U.S. Department of Energy reported that 24 vessels laden with domestically sourced LNG left for the foreign market. Of those, nine left from Sabine Pass, five departed from Corpus Christi, three each left from the Cameron and Freeport facilities, two departed from Cove Point off Maryland, and one each left from Elba Island and Calcasieu Pass.

Many of those cargoes are going to the European market to address serious supply-side issues stemming from the war in Ukraine. Russia is the primary natural gas supplier to the European market, and while flows have escaped direct Western financial pressure thus far, the threat of sanctions and real-world shipping issues have resulted in very serious supply-side concerns.

Industrial Info is tracking more than $200 billion worth of active LNG-related projects across the U.S. Subscribers can?click here?for a full list.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: LinkedIn.

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