Caribbean Broadcasting Corporation

The most credible news source in Barbados

Photo: Mario Tama/Getty Images

US replaces Russia as Europe’s top crude oil supplier

March 28, 2023
The United States is now the biggest supplier of crude oil to the European Union. Pictured is the Phillips 66 Los Angeles Refinery Wilmington Plant in 2022. (Photo: Mario Tama/Getty Images)

(CNN) — The United States is now the biggest supplier of crude oil to the European Union.

In December, 18% of the bloc’s crude imports came from America, EU data office Eurostat said Tuesday.

That is a big turnaround. Russia was until recently the bloc’s top supplier of crude, accounting for as much as 31% of total imports until the end of January 2022, according to Eurostat. The US, meanwhile, came a distant second, with a maximum 13% share.

But Moscow’s invasion of Ukraine in February last year led to an upheaval in Europe’s energy supplies.

EU states slashed their imports of Russia’s energy, and the bloc imposed sanctions on the country’s oil and coal exports.

In December, the European Union banned imports of Russian seaborne crude and introduced a price cap barring shippers, insurance brokers and other companies from providing their services if oil was bought for more than $60 a barrel.

When the war broke out, some European countries also started reducing their imports of Russian natural gas. Moscow, for its part, began to cut flows to the continent. State energy giant Gazprom first reduced gas deliveries through the Nord Stream 1 pipeline, which accounted for about 35% of Europe’s total imports of Russian gas in 2021. And in September, it shut off the pipeline, citing technical issues.

Russia’s share of Europe’s natural gas imports has fallen sharply, from 31% in the first quarter of 2022 to nearly 19% by the end of the year, Eurostat data shows. That has made the United States the bloc’s second-biggest supplier of gas, with a nearly 20% share, behind top source Norway, which accounts for almost 31% of EU gas imports.

US crude exports to Europe were rising before the war, though Russia’s invasion had increased the need to ramp up deliveries from alternative sources, said Jay Maroo, a senior analyst at data provider Vortexa.

Imports of Russian crude into the bloc were volatile between February and April last year, Eurostat said. But from September 2022, they declined gradually, until they made up just 4% of total imports in December.

By the end of the year, “the EU’s biggest suppliers of crude oil were the United States, Norway, and Kazakhstan, showing that the EU managed to adapt to the changing oil market landscape and virtually remove its dependence on Russian oil,” Eurostat said.

Russia has found new buyers for its oil keen to snap up barrels at a steep discount — Moscow’s Urals crude is currently trading at $54 a barrel, compared with $78 a barrel for Brent crude, the global benchmark.

India and China, in particular, have ramped up oil imports from Russia since the invasion of Ukraine.

Russian Energy Minister Nikolai Shulginov said Tuesday that Moscow had successfully rerouted the “entire volume” of exports of crude oil and oil products lost due to Western sanctions, according to comments reported by TASS, a Russian state-owned news agency. Yet the ministry expects Russian oil and gas production to fall this year, with gas extraction hit by the lack of European buyers, he said.

The rewiring of the global oil market has come at a price.

Maroo said that as crude exports are traveling further distances than before — from Russia to India and China, and from the US and Middle East to Europe — the “tanker fleet is generally more inefficient.”

“That means higher sustained freight costs to move oil around the world,” he said.

About The Author

Share this!