US Ban of Russian Oil Confirms Market Shift

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The US ban on imports of Russian crude, natural gas and refined products announced Tuesday does not represent a dramatic change, so much as confirmation and federal enforcement of an existing shift by refiners away from these supplies.

That’s because the US does not import much Russian oil — crude or refined products — and because industry players, ranging from majors such as BP to small, independent firms such as Par Refining, were turning away from Russian petroleum well before the US policy was announced.

“The de facto ban on Russian crude oil imports is here, with or without government legislation,” said Lipow Oil Associates’ Andy Lipow.

What’s on the Chopping Block

  • In 2021, the last full year for which data is available, the US imported 199,000 barrels per day of Russian crude and 473,000 b/d of products, according to the US Energy Information Administration (EIA). Of those product imports, roughly three-quarters consisted of unfinished oils, which are used as intermediate feedstocks in the refining process.

  • Russian imports accounted for 7.9% of the US' total petroleum imports last year, and about 3.3% of its crude imports.

  • Outright volumes of crude and products combined fluctuated throughout 2021, hitting a high of 848,000 b/d in July. But the overall trajectory in the second half of the year was downward, with Russian flows to the US hitting a low of 405,000 b/d in December.
  • The ban on Russian petroleum imports will not have a uniform impact. Very few US refiners were involved in Russian oil trade last year. Data show Valero, Marathon Petroleum, Par Refining and Delta Air Lines’ Monroe Energy as buyers. By the end of 2021, only Par and Monroe imported Russian crude, and in total only six companies were taking in any Russian petroleum: Par, Monroe, Chevron, Phillips 66, Valero and Exxon Mobil.

    As John Auers of refining consultancy Turner, Mason and Co. put it, Russian crude flows to the US are generally opportunistic and do not comprise any particular refiner’s baseload volumes.

  • In terms of products supply, the impact will be most tangible on the US East Coast, which imported roughly 120,000 b/d of Russian products in 2021. Of that total, 22,500 b/d consisted of diesel and another 46,000 b/d went into the gasoline pool.

    The region is short refinery capacity and relies heavily on imports for refined products. Nymex diesel futures — priced in New York Harbor — are skyrocketing. Currently, tanker tracking firm Kpler has identified just three cargoes of Russian petroleum bound for the US this month, all of them carrying gasoline components.

US Imports of Russian Petroleum
('000 b/d)CrudeTotal ProductsUnfinished OilsResidual Fuel OilDistillate Fuel OilGasoline Components

Circling the Drain

Russian petroleum imports into the US were already falling well before Russia invaded Ukraine. December saw US imports of Russian crude at 90,000 b/d and products at 315,000 b/d. The most recent preliminary weekly data from the EIA show crude imports from Russia at zero.

Even prior to the beginning of the invasion, US purchases of Russian petroleum were likely to be small this year. For one thing, the US downstream has undergone a dramatic rationalization, dropping some 800,000 b/d in throughput capacity amid the accelerating energy transition, the economic upheaval from the Covid-19 pandemic, and catastrophic storm-related damage along the US Gulf Coast. That limits the domestic appetite for both crude and intermediate feedstocks.

For another, domestic crude output was on its way up, and the logistical constraints that hampered flows from Canada were to a large extent resolved, meaning more North American supply for North American refiners.

The US downstream is also set for heavy maintenance this year, with several refiners engaging in long-delayed turnaround projects. That could put a lid on utilization, and thus crude and intermediate feedstock demand, for much of 2022.

De Facto vs. De Jure

The government’s ban on Russian petroleum imports comes in the wake of sanctions that were already prompting purchasers to turn away from Russian petroleum, as well as a general sentiment of solidarity with Ukraine.

“The industry has already taken significant and meaningful steps to unwind relationships, both with respect to assets in Russia, as well as imports of Russian crude oil and refined products,” said industry lobby group American Petroleum Institute in a press statement.

Par Refining announced last week that it would no longer purchase Russian crude, for example. And while Valero and Marathon Petroleum did not comment as of press time, market players say that they, too, are refraining from further imports from Russia.


US refiners are most likely to look to near neighbors to replace Russian import volumes. Par Refining has already said it will replace Russian crude with barrels sourced from North and South America.

Barrels that can match the quality of Russian crude largely come from Latin America, and domestic and Canadian barrels can be blended to specifications, although blending can be a tricky business.

Several market watchers have said they expect buying from Ecuador and Colombia to rise in the wake of the ban on Russian crude. This would not only make sense in terms of quality but would also help avoid surging tanker rates for longer hauls.

Exports of US medium and light, sour crude, although small, could also dwindle.

Crude Oil, Oil Products, Oil Trade, Oil Supply, Oil Demand, Supply & Demand , Independent Refiners, Refining, Policy and Regulation, Sanctions
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