UNITED STATES (VOP TODAY NEWS) — Since early May, US companies have purchased 5 million barrels of Urals oil – a quantity comparable to all Russian oil exports to the US since the beginning of the year.
This skyrocketing is the result of a sharp shortage of raw materials because of US sanctions against Venezuela.
Analysts predict that sales of Russian black gold in the US could triple by the end of the year.
The Venezuelan tap is cut
US oil producers began counting their losses almost immediately after sanctions were imposed on the Venezuelan company PDVSA. Supplies from Venezuela have been divided by three, and even though the US has low sulfur oil (BTS, including WTI West Texas) in abundance, this volume is not enough to cover all needs of the country.
Several US refineries, particularly on the East Coast and the Gulf of Mexico, are focused on refining high-sulfur oil (HTS), which comes mainly from Venezuela. But the Americans have blocked this channel themselves.
According to investment firm Caracas Capital Markets, during the last week of February, two cargo ships shipped 766,000 barrels of Venezuela to the United States. In the same week, Russian companies sent nine ships with more than 3 million barrels of oil and petroleum products across the ocean.
In early April, Venezuelan oil exports to the US were divided by 4.5 yoy, up to 139,000 barrels a day. After the embargo decree on April 28, these supplies completely ceased.
These restrictions have caused a serious shortage in the US market, recognizes the International Energy Agency (IEA). All key players in the US refining sector – Citgo Petroleum, Valero Energy, and Chevron – have been affected.
While during the first two weeks of May, the United States was no longer receiving Venezuelan oil, Russian oil purchases reached record levels.
According to Caracas Capital Markets calculations, between May 1st and 13th, 13 Russian cargo ships delivered 5 million barrels to the US – almost the same amount as in the previous four months.
“The irony is that the Russians are taking advantage of the Venezuelan crisis: one country hit by sanctions is replacing another in US shipments,” says Russ Dallen, managing partner of Caracas Capital.
According to forecasts, monthly supplies of Russian oil to the United States are expected to triple by the end of the year. This is also the opinion of other experts.
“Russia gladly fills the Venezuelan niche in the US market. In this way, Moscow is very effective in its back: after all, he lent a lot of money to Caracas, and hopes of recovering this money are low,” say experts Oil Price website.
HTS oil shortage
European refineries, oriented towards HTS oil, are also seeking to replace this raw material which has disappeared from the market. In spite of themselves, they were the victims of American sanctions against Iran and Venezuela, which caused the market to lose around 800,000 barrels a day.
In addition, under the Opep + agreement, the exporting countries first reduced the production of HTS oil, while maintaining the quantity of BTS oil supplies – more expensive.
According to Refinitiv Eikon, between October and March, Saudi Arabia halved HTS oil exports in Europe, and Iraq more than 40%. In April, the lack of Venezuelan and Iranian oil pushed European buyers to fight for the Russian barrel Urals, the Reuters news agency reported.
“All refineries are looking for Urals or its analogues. Of course, there will not be enough for everyone, “according to a European oil operator quoted by the agency.
Alternative deliveries are much more expensive. In March, stiff competition between European refineries for Russian oil reduced the price gap between Urals and Brent brands by 30% – a minimum since 2013.
In March, this situation brought Russian oil producers $ 140 million more than in October, before the adoption of oil sanctions by US President Donald Trump against Iran and the embargo on oil supplies Venezuela.
“Sanctions and other geopolitical factors have already led to a shortage of heavy oil in the refining sector that was imported from Venezuela and partly from Iran. This problem is particularly relevant for the United States. Hard to say how heavy oil deliveries will be offset, but their shortage is confirmed by Urals bonuses and increasing discounts on WTI and Brent brands, “Russian Energy Minister Alexander Novak recently told Asharq newspaper. al Awsat.
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