US sends first sour oil tanker to Europe

Tanker Capricorn Sun with American sour oil first arrived in the German port of Rostock last week, Reuters reported on the night of August 9. The ship was chartered by the Anglo-Dutch energy company Shell. The agency clarifies, citing Refinitiv data, that about 570,000 barrels of oil were delivered to the Capricorn Sun from Louisiana to Germany.

In early June, the European Union (EU) approved the sixth package of anti-Russian sanctions, in particular, providing for a ban on the import of Russian oil and oil products. An embargo on the import of crude oil will come into force on December 5, 2022, on the import of petroleum products on February 5, 2023. An exception was made for Hungary, Slovakia and the Czech Republic as landlocked countries – they can buy Russian oil coming from through the Druzhba oil pipeline and after December 2022. At the same time, as it became known on August 9, the southern branch of Druzhba, which runs through Ukraine to Central Europe, was stopped, because due to sanctions “Transneft» failed to make a transit payment.

Even before the introduction of official bans by the EU, after the start of the NWO in Ukraine, traders began to reduce trade in Russian oil. But already in April, Bloomberg, citing sources, reported that Shell began trading in the so-called “Latvian blend”, in which oil from the Russian Federation was mixed with other grades in such a way that the share of domestic Urals in the final product was less than 50%. Shell did not consider such a mixture to be Russian.

After disruptions in the supply of oil from Russia, European refineries, accustomed to working with Russian sour crude (in Urals, Volga oil with a high sulfur content is mixed with lighter Siberian oil), began to experience difficulties in finding suitable raw materials. In March, the Argus pricing agency reported on attempts to find analogues among oil grades from the Middle East, in particular in Iraq.

In early July, the European Commission (EC) announced the need to ban the supply of Russian oil to the European market, even as part of mixtures, and in early August, the EU recommended that oil importers indicate in sales contracts that the batch sold does not contain oil from Russia (Vedomosti). wrote about it on August 3).

According to the Federal Customs Service, about 108.1 million tons of oil (787.3 million barrels) worth $50.9 billion were exported from Russia to the EU in 2021. Of these, 19.2 million tons (139.8 million bbl). According to BP and Vedomosti, in 2021, the total oil consumption in the EU was about 534.4 million tons. Of these, about 102 million tons (2.04 million barrels per day) were in Germany.

According to statistics from the Energy Information Administration of the US Department of Energy, in mid-July 2022, US production was about 12 million barrels per day, consumption was about 20 million barrels per day.

“The United States remains a net importer of oil, and even a favorable situation for them associated with anti-Russian sanctions will not be able to change this,” says Alexander Frolov, deputy director of the National Energy Institute. According to the expert, to replace Russian oil in the German market alone, it will take about 245 tankers with American oil, approximately the same volume as Capricorn Sun. But for this, according to Frolov, there are neither free tankers nor volumes of oil on the US market. “Even if a single American company seizes the favorable moment and sends its oil to the EU, this will not change the balance of supply and demand in the US oil market. And the missing volumes will have to be looked for somewhere else,” the analyst emphasized.

Sergey Grishunin, Managing Director of the NRA rating service, recalls that after the imposition of sanctions against Venezuela and Iran, the United States themselves increased the purchase of Russian oil and fuel oil precisely in order to load their own refineries, which are also tuned to heavy sour oil (Venezuelan raw materials also contain a lot of sulfur. – Vedomosti) ). “In such a situation, the reorientation of US exports to the European market will lead to a serious shortage of oil in the domestic market,” the expert believes.

“Even if the United States can find physical volumes to replace Russian oil on the European market, then the question arises of the comparability of its quality. [с российской]”, – adds Maria Belova, Research Director of Vygon Consulting. She recalled that the practice of mixing different grades of oil is widely used at receiving oil terminals in order to obtain a product with the properties necessary for refiners.