Back to America: Why Trump is interested in Russian oil
US President Donald Trump said that the United States could purchase a number of goods from Russia, primarily mineral resources. The most popular topic was the notorious rare earths, but Trump also mentioned oil. Although the United States is the world's largest oil producer, the proposal is by no means meaningless. Moreover, until 2022, Russia was a major supplier of black gold to America, and in fact its share in American oil imports was only growing. Purchases were also carried out in the middle of its own territory, albeit in smaller volumes, and this did not contradict any sanctions. Why Russian oil is of interest to the United States and what benefits it may have for Russia is in the Izvestia article.
Buy Russian
The revolution of the 2000s in the American energy industry and the use of fracking technologies led to a sharp increase in oil production in the United States. From 2008 to 2018, it more than doubled. Although the cost of production in America is higher than in most countries of the world (around $50-55 per barrel on average), at current prices this is enough to maintain high production rates and even increase them. Some stabilization of production occurred only under the previous president Joe Biden, whose administration was not very positive towards the US oil industry (for example, it banned drilling on federal lands on environmental grounds).
Although the United States is now actively exporting oil abroad, production is not fully closing the country's needs (13.3 million barrels per day versus 18.5 million barrels). Imports are still important, although they have decreased in size compared to the "zero" years. Canada was and remains the largest supplier (about 50% of all imports).At the same time, if we take the period up to 2022, Russia's role was quite significant. Moreover, since the early 2000s, it has only increased year after year. If in 2000 it was less than 1%, then in 2021 it will be close approached 8%.
All this happened despite the intensification of anti-Russian rhetoric. While the United States was putting pressure on the EU with hints of increased sanctions against Russia, the entire second half of the 2010s saw an increase in oil supplies from Russia to America. In 2020, the Russian share of the American market exceeded that of Saudi Arabia and came close to that of Mexico.By the way, this policy confirmed that Trump's initiatives were an open statement of what had been done quietly before 2022, regardless of which administration was in Washington.
Severe case
At the beginning of the 20th century, the United States adopted The Jones Act, which limited the tonnage of coastal vessels in the country. In fact, this meant that the ability of American consumers from the East and West Coasts to obtain oil from the Gulf of Mexico (after the renaming of the American Gulf) was severely limited. Gulf ports are connected to major oil-producing regions by pipelines, but shipments to other states on small ships often do not make commercial sense. As a result, a significant portion of American oil (up to 3 million barrels per day) is exported, and instead of it, foreign oil enters the domestic market.
— First of all, this is due to the needs for different grades of oil — the United States produces mainly light grades, and imports heavier grades," Sergey Kaufman, an analyst at Finam, told Izvestia. — This is also partly due to logistical factors: for a number of northern states, it is more convenient to import oil from Canada than to receive oil from oil-producing regions, most of which are located in the south. Until 2022, Russia was one of the top three oil suppliers to the United States, as some Russian grades met the needs of American refining.
Indeed, most American refineries were built and upgraded before the end of the 2000s. They were not designed for the distillation of light oil produced in American shale fields. But Russian Urals (or varieties close to it) is relatively sulfurous and heavy, and therefore perfectly suited for them. As a result, supplies were extremely profitable, regardless of Washington's political course.
In parallel, in the 2010s, tough sanctions were imposed against the traditional supplier of such oil, Venezuela. Coupled with the sanctions against Iran, this made importing from Russia not only an alternative, but the default option. After the introduction of comprehensive sanctions in 2022, the United States backed down on the issue of importing Venezuelan oil, which replaced Russian oil at US refineries. Nevertheless, even under the conditions of these sanctions, the purchase of black gold from Russia resumed in the fall of 2023, albeit in relatively small volumes — several tens of thousands of barrels per day.
But now the political situation is changing again. Marco Rubio, a hardliner against Venezuela, became the US Secretary of State. A former adviser on Latin America policy under George W. Bush recently said that the Trump administration's top priorities would be oil sanctions and "reviewing oil licenses that allow American and foreign oil companies to do business with [Venezuelan President Nicolas] Maduro."
Indeed, a month after his inauguration, Trump revoked the license for oil production in Venezuela from the American Chevron corporation, which Joe Biden had granted it in 2022. Chevron produced about 240,000 barrels per day in Venezuela, most of which were sent to the US market. The American president accused the South American country of violating the rights of voters in the presidential election, as well as the lack of progress in returning its migrants from the United States.
In place of Venezuela
In the context of a parallel confrontation with Canada (which, however, may end if the Conservative Party wins the election, but this is inaccurate), the question arises — what kind of oil do Americans want to see on their national market? Russian is ideally suited for these purposes. It remains a small matter to ease the sanctions regime.
This situation can be beneficial for Russia. Shipments to America, if they start in full, will not be subject to the price ceiling. In addition, the logistics situation there will be slightly better than with supplies to India and China from the Baltic ports. But it is equally important that such exports may be associated with increased investments from the United States in the Russian oil industry. Moreover, it's not so much about money as about the technologies that the Russian black gold industry needs.
According to Sergey Kaufman, Russian companies in the oil industry are capable of operating without Western technologies (although with some limitations).
— At the same time, domestic corporations lack certain technologies, such as in the areas of refinery modernization, deep-sea offshore production, or production intensification. We also note that without foreign capital, it is difficult for large projects, such as Vostok Oil, to receive a high rating, since there are no capital markets similar to Western ones in the Russian Federation, of course, the analyst concluded.
Переведено сервисом «Яндекс Переводчик»
