Russia was No. 3 oil supplier to US in November as tensions threaten flows

Russia was the No. 3 oil supplier to the US in November after Canada and Mexico, US Energy Information Administration data showed Jan. 31, as the Ukraine crisis threatens to disrupt the flows.

S&P Global Platts Analytics expects any disruption in the Russian crude to have minor impacts, as US refiners could backfill by easing exports of US Gulf Coast sour crudes such as Mars. Lower US imports of Russian oil feedstocks would have a bigger impact, but Gulf Coast refiners could run Canadian or Latin American heavy grades at a cost to margins.

The US imported 595,000 b/d of Russian crude and refined products in November for an average of 696,000 b/d from January-November, according to EIA.

Unfinished heavy oils represented the bulk of the Russian flows to the US in November (279,000 b/d), with crude only at about 30% of the total (182,000 b/d).

The flows are well below imports from Canada, the longtime top US oil supplier that sent 4.5 million b/d of oil, including 3.9 million b/d of crude, in November.

The second and fourth oil suppliers to the US in November were Mexico (700,000 b/d) and Saudi Arabia (555,000 b/d).

US refiners turned increasingly to Russian supplies when January 2019 sanctions against Venezuela's PDVSA cut off flows of heavy feedstock.

Ukraine standoff

US President Joe Biden said Jan. 31 that Russia would "face swift and severe consequences" if it "chooses to walk away from diplomacy and attack Ukraine."

The White House has said its response would include financial sanctions to restrict foreign capital and export controls to block US software and technologies that it says are "essential inputs to Russia's strategic ambitions."

Other options include banning Russia from dollar trades and blocking access to the international financial messaging service SWIFT, both of which analysts see as less likely because they would have massive consequences for energy markets and the global economy.

Platts Analytics does not expect the US to impose secondary sanctions on Russian oil customers, given Europe's heavy dependence on the flows and oil prices already at $90/b.

"The West is unlikely to jeopardize such large volumes," Platts Analytics said.