Europe can grab ‘super-suitable’ US oil from Russian crude: Vortexa

  • Europe can count on the United States if it stops using Russian oil, said Vortexa’s chief economist.
  • U.S. crude is “super suited” to European refineries because of its quality, cost and availability, David Wech said.
  • Russia supplies a quarter of the EU’s oil, but the bloc is trying to cut it after invading Ukraine.

Europe is under pressure to wean itself off Russian energy, starting with a ban on crude imports. This could prove costly and politically tricky, but the region would have no problem bridging that gap and the United States is emerging as an ideal substitute, according to energy market intelligence provider Vortexa.

“The United States will rank well, that’s natural, given its size, proximity and quality of crude,” Vortexa chief economist David Wech said in an interview with Insider. He added that the market security offered by the United States also makes it an ideal supplier.

Russia supplies about 25% of the European Union’s oil and the bloc has paid Russia about $46 billion for its energy since the start of the war in Ukraine, according to a report by the Center for Energy Research and clean Air.

Western countries hit Russia with harsh sanctions over its invasion of Ukraine, but the EU has yet to ban Russian oil and gas.

Germany said this week it was ready to stop buying Russian oil, the Wall Street Journal reported, which would allow the EU to impose new sanctions on Moscow. Germany had already reduced its inflow from Russia, which now accounts for 12% of the country’s oil consumption, down from 35% before the invasion of Ukraine, German Economy Minister Robert Habeck said. .

Russia normally exports some 4 million barrels a day of oil by ship, with the rest of its roughly 7 million barrels a day of overseas sales flowing through pipelines in the east and west.

Much of that crude ends up in Europe, which takes in about 2.7 million barrels a day, according to S&P Global Platts. An additional million barrels a day arrive via the 4,000 kilometer long Druzhba pipeline, which crosses Eastern and Western Europe and serves Germany, the Netherlands, Poland and Austria , among others.

Unlike natural gas, which almost exclusively comes to Europe by pipeline from Russia, the remaining 1.7 million barrels per day that could be affected by an EU ban would be reasonably easy to obtain from various crude exporters, Wech said.

“Europe is in a very favorable geographical position. Apart from Russia, there are also the Caspian countries, there is production in the North Sea, there is production in North Africa, there is has Africa, Nigeria, Angola, which is also very close at a distance,” Wech said. “Then, of course, there is the United States.”

Official data shows U.S. crude exports hit a record 10.6 million barrels a day in the week to April 15 and Europe is currently its biggest customer. In the first four months of the year, 42% of shipments went to Europe, down from 38% last year, while 39% went to Asia, down from 44% at this point in 2021, Wech said.

The key is that U.S. oil is generally light in density and low in sulfur, known as the ‘sweet’ grade, as opposed to Russian crude, which is heavier and more sulfury, known as the ‘sweet’ grade. acid”. A large portion of US refineries are focused on processing Russian-type grades and therefore do not consume as much domestic production.

“(American) light sweet crude is generally suitable for the European market. It is generally a relatively abundant and therefore relatively cheap crude,” Wech said. “It’s super suitable for Europeans also from the point of view of overall processing costs.”

Even if Europe can buy oil from other countries, a ban on Russian crude would risk an escalation of war in Ukraine, according to Wech, and hit consumers who are already struggling with spiraling inflation, largely driven by the oil and gas prices. .

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