RPT: ANALYSIS - US' Increasing Import Of Russian Oil Render Fingerwagging At EU, Moscow Energy Ties Hollow

MOSCOW (Pakistan Point News / Sputnik - 28th March, 2021) US President Joe Biden's aggressive posture towards Russia threatens to increase the disconnect between Washington and energy firms whose reliance on importing Russian oil has only been growing in recent years, experts told Sputnik.

In addition to the stark double-standards of pressuring Europe to forego Russian energy imports, the White House policy looks increasingly out of lockstep with the dynamics of the global energy markets both globally and at home.

According to the US Energy Information Administration, imports from Russia averaged 538,000 barrels per day (bpd) in 2020 � compared to the 522,000-barrels-a-day average from Saudi Arabia � accounting for 7 percent of annual US imports of oil and refined products last year.

"US imports of Russian crude oil and products are replacing Venezuela's crude oil exports to the United States. Deprived of access to Venezuelan crude by US sanctions and facing reduced shipments from OPEC, US refiners turned to Russian oil in 2020 to fill the gap," Mamdouh Salameh, International Oil Economist, Visiting Professor of Energy Economics at ESCP Europe business school, London, told Sputnik.

The top US importers of Russian crude were ExxonMobil and Valero importing 55 million barrels and 50 million barrels respectively and accounting for almost 50 percent of total US imports of Russian oil according to US data, Salameh said, adding that importers have opted for Russian oil to fulfill their needs rather than increase imports of expensive traditional OPEC sources.

"It shows that slogans raised by former President [Donald] Trump about achieving US energy independence and oil self-sufficiency will remain slogans well into the future," Salameh added.

At the same time, Francis Perrin, a senior fellow at the Policy Center for the New South (PCNS, Rabat) and at the French Institute for International and Strategic Affairs (IRIS France), told Sputnik it was important to keep this trend in perspective.

"The U.S. growing oil imports from Russia last year constitute an important and interesting trend for various economic and political reasons but it is essential not to forget the broader view," Perrin said, explaining that although Russia was the third-largest energy supplier, its share remained 5.4 percent of the total energy basket, "not in itself a threat for the largest economy in the world."

In December 2020, the leading oil supplier to the US market was Canada with 4,440,000 bpd (57.4 percent of the total). Mexico's share was 740,000 bpd, while Russia was the source of 416,000 bpd, figures from the US Energy Information Administration show.

Perrin reminded that this pie chart was less a result of decision-making in Washington but more of the private oil behemoths in Texas.

"The bulk of US oil imports is the consequence of decisions taken by oil companies and not by the US government. Oil companies take their decisions on the basis of economic and commercial factors (availability, prices, markets, quality of crude oil, technical capacities of their refineries and so on) and not on political factors except in the case of economic sanctions," Perrin said.

Ball State University Professor of Economics, Cecil Bohanon, told Sputnik that oil importers always have an array of options to import oil from, meaning that Russia's preferential position is down to convenience rather than political expedience.

"Oil imports are decided by private firms in the USA and trans-shipments are possible....note the data indicate that in certain months in certain years the USA has imported oil from non-oil producing states such as South Korea or Belgium albeit in small quantities. This implies that there are lots of substitutes for Russian oil," Bohanan said.

While Russian oil exceeds the likes of Saudi Arabia and Iraq, Washington continues to pressure European nations to abandon oil projects with Russia, chief among them the Nord Stream 2 pipeline.

Last week US Secretary of State Antony Blinken warned that companies involved in the pipeline's construction were at risk of facing sanctions unless they withdraw from the project immediately.

"In matters relating to its needs and national interests, the United States uses double standards and is prepared to bend the rules. On the one hand, it warns the European Union against becoming too dependent on Moscow for natural gas supplies thus imposing the most restrictive sanctions on the Nord Stream 2 gas pipeline... On the other hand, it is buying more of Russian oil than ever before," Salameh said.

With the 760-mile-long pipeline already 96 percent completed and with billions of Dollars already spent on constructing it, Mamdouh Salameh told Sputnik that the prospects of Russia's Gazprom abandoning the pipeline are unthinkable.

"The United States knows full well that the Nord Stream 2 gas pipeline is unstoppable no matter how more sanctions it adds against it. Moreover, Putin's Russia will never succumb to pressure from the United States and will do whatever it takes to ensure that Nord Stream 2 gas pipeline is completed," Salameh said, explaining that Washington's bellicose rhetoric equates to little more than histrionic protestations.

While Salameh maintained that energy firms were attracted to Russian oil in lieu of more expensive products from the OPEC heavyweights, Perrin maintained this dynamic was more dependent on the kind of output decisions are made in Riyadh, Baghdad and at OPEC summits.

"Things could change if Saudi Arabia, Kuwait and Iraq increase their production and exports to the United States. This could potentially displace some Russian exports," Perrin said.

He pegged the fate of Russia's share in the US oil markets on the key energy-minister-level OPEC and OPEC+ meetings schedules for next week.

"Last year, due to the OPEC+ output cuts and to U.S. sanctions against Venezuela US oil companies bought more oil and oil products from Russia but this does not mean that this upward trend will go on. In the short-term much will depend on the decisions that the OPEC+ countries will take regarding their crude oil production in 2020," Perrin explained.

March 31 will see the Joint Ministerial Monitoring Committee meeting with the participation of OPEC+ nations and the next day OPEC will hold talks to determine the oil production capacity going forward, expected to have a determining impact on oil prices immediately and the oil market at large for the rest of the year.

All this comes against the background of the US seeing its domestic oil production continue to balloon thanks to new fracking technology and its overall energy imports decrease to a decades-low.

"The USA is not self-sufficient in oil but is closer to that benchmark than it has been in decades," Bohanan, of Ball State University, said.

He added that the Biden administration's attitude towards fracking, a more pollutant and energy-intensive form of oil extraction, will determine the future of the country's energy makeup.

"I think a lot of it will depend on the new Administration's position on the development of fracked oil in the USA - a position which it seems hostile. If new oil development is blocked then Russia may become a marginally more important source," Bohanan said.

Like with most issues Biden inherited from the previous administration, he is less likely to provide a quick fix but rather a patch things up well enough to carry on the set of contradictions with little, if any, systemic change.

As US private firms find solutions around Washington's diktats, crying foul over EU-Russian self-interested supra-political relations rings exceedingly hollow.