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Who is one of the main beneficiaries of sanctions on Russian and Venezuelan oil? U.S. suppliers have moved aggressively into markets once dominated by OPEC and its allies.
U.S. oil exports have set five new monthly records since Western countries began imposing sanctions on Russia in 2022. And trade restrictions on Venezuela are set to be renewed in April, and India, one of the biggest illegal buyers, is starting to replace U.S. barrels with sanctioned crude. oil.
The change highlights how sanctions have helped U.S. crude oil gain market share around the world. U.S. oil has long been the world’s go-to flex barrel, but disruptions to energy flows after Russia’s invasion of Ukraine have created new demand for U.S. barrels. In the aftermath, shipments to Europe and Asia soared, turning the United States into one of the world’s largest exporters.
Vinyl production from the United States is also helping American producers gain a greater foothold in overseas markets, just as OPEC and its allies are constraining their own supplies. Spot oil prices are reflecting that, with Houston’s WTI trading near its highest since October and stock benchmark Mars not far behind.
Gary Ross, a veteran oil consultant turned hedge fund manager at Black Gold Investors LLC, says, “U.S. production is increasing, but OPEC and Russian production is decreasing. “And the US will have more market share.”
India is the third-largest oil importer and Moscow’s second-largest buyer after China, and is the latest market to see an influx of U.S. crude. U.S. shipments to India are expected to surge to the highest level in nearly a year in March, according to data from oil tracking firm Kpler.
At the same time, Russia’s oil imports are down about 800,000 barrels a day from last year’s peak, a Bloomberg tanker tracker found. Russian shipments could fall further after Indian oil refiners stopped accepting cargo from tankers owned by state-run Sovcomflot PJSC, which was recently sanctioned by the United States.
Although U.S. supplies cannot completely replace Russian crude because of differences in oil quality and voyage times, “there is definitely a slight shift toward bringing in more U.S. crude.” said Matt Smith, lead oil analyst for the Americas at Kpler.
Indian refiners have also suspended purchases from Venezuela ahead of the expiration of US sanctions waivers in the middle of next month. These supplies are now on track to reach their lowest levels this year.
Even before the latest round of trade restrictions, the United States was quickly becoming a major supplier to Asia, with imports from the United States setting an annual record last year, according to the EIA.
Additionally, in Europe, which has largely avoided importing Russian crude since the Ukraine war began, U.S. crude oil shipments hit a record high of 2.2 million barrels per day in March, according to ship tracking data compiled by Bloomberg. It is expected to reach .
To be sure, not all influence from Europe is due to sanctions. Since West Texas Intermediate was included in the Brent crude oil benchmark last year, imports to the Netherlands have surged, ensuring that U.S. crude becomes part of Europe’s diet.
However, shipments increased significantly after the sanctions were imposed, as European countries sought sources other than Russia. Imports from the United States to France increased by nearly 40% from 2021 to 2023, and imports to Spain increased by 134%.
“As U.S. production continues to increase gradually, it is likely that every incremental barrel produced will be exported,” Kepler’s Smith said.
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