Europe could take ‘too fit’ US oil over Russian crude: Vortexa

  • Vortexa’s chief economist said Europe could rely on the United States if it stopped using Russian oil.
  • David Wish said US crude was “very suitable” for European refiners because of its quality, cost and availability.
  • Russia supplies a quarter of the EU’s oil, but the EU is seeking to cut that down after the invasion of Ukraine.

Europe is under pressure to wean itself off Russian energy, starting with a ban on crude imports. It may be costly and politically difficult, but the region will have no problem filling that gap, and the United States is emerging as an ideal alternative, according to energy market information provider Vortexa.

“The US will rank highly, which is normal, given its size, proximity and also the quality of the raw,” Vortexa chief economist David Wech said in an interview with Insider. He added that the market security that the United States provides also makes it an ideal supplier.

Russia supplies about 25% of EU oil, the bloc has paid to Russia for 46 billion dollars to its energy since the start of the war in Ukraine, a Energy and Clean Air Research Center report She said.

Western countries imposed tough sanctions on Russia following its invasion of Ukraine, but the European Union has yet to ban Russian oil and gas.

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

Russia usually exports about 4 million barrels of oil per day by ship, while the remaining 7 million barrels per day is exported in foreign sales via pipelines to the east and west.

Much of that crude ends up in Europe, which consumes about 2.7 million barrels per day, according to S&P Global Platts. Another million barrels per day arrives via the 4,000-kilometre Druzhba pipeline, which crosses eastern and western Europe and serves Germany, the Netherlands, Poland and Austria, among other countries.

Unlike natural gas, which arrives almost exclusively in Europe via a pipeline from Russia, the remaining 1.7 million barrels per day that could be affected by an EU embargo would be reasonably easy to obtain from a variety of crude oil exporters, Witch said.

“Europe has a very favorable geographical position. Aside from Russia, there are also the Caspian Sea countries, there is production in the North Sea, there is production in North Africa, there is Africa, Nigeria and Angola, which are also very close from a distant perspective. ” Then there is of course the United States.

Official data shows that US crude exports hit a record high of 10.6 million barrels per day in the week ending April 15, and Europe is its biggest customer at the moment. Witch said that in the first four months of the year, 42% of shipments went to Europe, up from 38% last year, while 39% went to Asia, down from 44% at this point in 2021.

The key is that US oil is generally light in density and low in sulfur content, known as “sweet” grade, unlike Russian crude, which is heavier and by weight of sulfur, known as “sour” crude. A large proportion of US refineries are geared towards processing Russian-style grades, and therefore do not consume as much domestic production.

“Light (US) crude is generally suitable for the European market. Crude in general is relatively abundant and therefore relatively cheap,” Witch said. “This is very relevant for Europeans as well from an overall processing cost perspective.”

Although Europe could buy oil from other countries, a ban on Russian crude would risk escalating the war in Ukraine, according to Wech, and affect consumers already suffering from high inflation, driven largely by oil and gas prices. . .