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- Oil prices: how the flows of Russian raw materials will change amid the US tariff wars
Oil prices: how the flows of Russian raw materials will change amid the US tariff wars
The export flows of Russian oil, as well as its prices, may significantly change against the background of a possible easing of US sanctions, which was unexpectedly discussed in the Western media. For example, on March 10, Bloomberg reported that Donald Trump's advisers are already working on a plan to ease restrictive measures against raw materials from the Russian Federation, including the so-called oil price ceiling. The new White House administration is now in favor of easing anti-Russian restrictions, including in order to maintain a balance of supply and demand, industry experts say. In their opinion, it is quite possible that oil and petroleum products from the Russian Federation, which Europe recklessly abandoned, may eventually go to the United States.
Which countries supplied oil to the USA
Representatives of Russia and the United States at a meeting in Riyadh in February agreed to establish a dialogue on resuming economic cooperation.
"Agreements have been reached to establish a dialogue to agree on ways to resume cooperation in the economy, including energy, space and other areas of mutual interest," the final communique said.
And on the eve of new negotiations on the settlement of the Ukrainian issue, which are to take place in Saudi Arabia, it became known that the United States is already working on possible options for easing sanctions imposed on Russia, including restrictions on oil prices. This was reported by Bloomberg, citing some informed sources. In addition, it was reported that in addition to the US-Ukrainian talks, representatives of the US presidential administration plan to meet with the Russian delegation.
Starting from December 5, 2022, the ceiling on prices for Russian crude oil was introduced by the European Union (with the exception of Hungary), G7 members (Great Britain, Germany, Italy, Canada, France, Japan and the USA), as well as Australia. The maximum price set by Western countries was $60 per barrel. In February 2023, a ceiling of $100 per barrel was introduced for "light" petroleum products (diesel fuel, gasoline) and $45 per barrel for "dark" (fuel oil).
It was assumed that the functioning of the mechanism would be evaluated every two months, depending on market developments. In addition, after each change in the marginal cost, there should have been a transition period of 90 days until it entered into force. However, the restrictions set in late 2022 and early 2023 have not changed since their introduction.
On March 4, import duties of 25% imposed by order of Donald Trump on Mexico and Canada, as well as additional 10% surcharges on products from China, began to take effect (now they total 20% for China).
— It is worth noting that Canada and Mexico were the leaders in the supply of oil and petroleum products to the United States. Russia and Saudi Arabia shared the third place until 2022," recalls Ekaterina Kosareva, Managing Partner of WMT Consult.
Daily oil consumption in the United States is about 20 million barrels per day, with production of 13.4 million barrels per day, according to the Energy Information Administration of the Ministry of Energy of the country. According to the same agency, exports amount to about 4 million barrels, while imports amount to 6.5 million.
Alternative oil supplies
In addition, US Secretary of Energy Chris Wright intends to request up to $20 billion to replenish oil reserves in the country's strategic reserve, which were squandered by the Joe Biden administration. According to the head of the department, their restoration will take from five to seven years.
At the time of the big sell-off in 2021, there were approximately 617 million barrels in the US strategic reserve. After its completion in July 2023, the volume was 346.8 million. To date, this figure has risen to 393.3 million barrels.
Thus, the United States today needs alternative supply channels in order not to accelerate fuel prices and achieve its goals.
— In case of easing or easing of sanctions against oil shipping and price restrictions, it is possible to resume supplies of Russian raw materials to the American market. These supplies are currently in demand in the United States against the background of the introduction of customs duties on Canadian and Mexican oil," said Tamara Safonova, General Director of the Independent Analytical Agency for the Oil and Gas Sector.
According to her, American oil refineries have already started searching for a replacement for raw materials from Canada and Mexico and are generally awaiting the possibility of acquiring, in particular, Russian resources.
— This also coincides with the interests of those OPEC+ countries that have decided to gradually restore oil production. Previously, they were implemented under voluntary restrictions starting from April 1, 2025. The easing of sanctions will lead to lower freight costs and the possibility of replenishing strategic reserves at an affordable price for the United States itself," Tamara Safonova added.
What will OPEC say?
Igor Yushkov, a leading analyst at the National Energy Security Fund and an expert at the Financial University under the Government of the Russian Federation, recalls that OPEC+ had planned to increase oil production since October last year. However, in the end, the countries participating in the agreement decided to increase production only from April 1, 2025.
This decision was made against the background of the fact that the United States withdrew the decision to suspend sanctions against the Venezuelan oil and gas sector due to "the lack of progress between the president of this country, Nicolas Maduro, his representatives and the opposition." In addition, the Trump administration has increased pressure on Iranian oil exports. The United States is currently developing a plan to intercept and inspect Iranian tankers in international waters in order to increase economic pressure on Tehran, the Reuters news agency reported.
President of Venezuela Nicolas Maduro
— If they continue to put pressure on Iran and Venezuela and at the same time buy more oil for their reserves, this will push prices up — and quite high — depending on how seriously they are going to remove Iranian oil from the world market. Naturally, an increase in OPEC+ production in general and in Russia in particular may act as a deterrent. Therefore, the lifting of sanctions against our country will help to balance the market," Igor Yushkov believes.
According to Alexander Frolov, Deputy Director General of the Institute of National Energy, OPEC+ will be the main deterrent for our oil.
— Production growth for Russia begins in April. This means that there will be a small increase in the range of several tens of thousands of barrels per day per month. And we probably won't see any significant changes in oil flows," the source said.
Nevertheless, according to Ekaterina Kosareva, the signals coming from Washington are difficult to perceive unambiguously, but in order to balance supply and demand, the United States may well cancel or soften the ceiling on prices for Russian oil.
Of course, we should not expect this in the near future, Ekaterina Kosareva concluded: it is unlikely that domestic oil and petroleum products will occupy a leading position in the American market, but this will significantly increase the competitiveness of our raw materials and simplify negotiations with a number of importers.
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