AFPM, US refiners support suspension of Russian crude, refined products imports

The American Fuel & Petrochemical Fuel Manufacturers reiterated its position supporting the Ukraine against Russian military action, calling for the suspension of US imports of Russian crude oil and refined products.

"AFPM fully supports the suspension of all future purchases of crude oil and petroleum products from Russia," wrote AFPM CEO Chet Thompson in a March 2 letter to Democrats in the House of Representatives Energy & Commerce Committee in response to their March 2 letter seeking clarification of the AFPM's position regarding a recent blog post.

To protect consumers, however, any import prohibition should exempt products currently in transit to the US, Thompson said in his letter, conscious of the rising price of gasoline, which is expected to average $3.90/gal next week, according to GasBuddy data.

At issue is a blog post Thompson wrote Feb. 25 entitled "Oil and Petroleum Imports from Russia Explained," which provided factual information and details on volumes of Russian crude oil and petroleum products imported into the US and its impact on US refiners, consumers, and refined product flows if all Russian imports ceased.

In his blog, Thompson said the US imported 209,000 b/d of crude and 500,000 b/d of petroleum products from Russia, with Russian crude accounting for 3% of all crude processed by US refineries.

The March 2 letter signed by Representatives Rush, McNerney, Peters, Castor, Welch, and Blunt Rochester expressed concern that the AFPM was defending the import of Russian crude oil, noting their concern this would blunt the impact of economic sanctions placed on Russia from the US and other nations.

"Therefore we seek clarification of AFPM and of AFPM's members' stances on the purchase and importation of Russian crude oil and petroleum products for the duration of the war in Ukraine," said the March 2 letter from the legislators.

Thompson explained in his letter that rather his blog was not a defense, but rather written "as a factual response to multiple inquiries from policymakers and the media" about the role of Russian crude and refined products in the US.

No formal Russian import ban

While there is no US ban on importing Russian crude oil and refined products, virtually every US refiner has decided proactively to not import Russian barrels.

But three US senators introduced March 3 the Ban Russian Energy Imports Act, which would place an embargo on all Russian energy imports including crude oil, petroleum, petroleum products, liquefied natural gas, and coal, which could codify any such ban.

Many refiners have not publicly stated their intent, citing commercial confidentiality around crude sourcing, but sources familiar with refinery operations at many various facilities have said that Russian crude is being replaced by other crudes.

Par Pacific is the latest refiner, saying March 3 it would suspend purchases of Russian crude for its 93,500 b/d Hawaii refinery. According to commodity data tracker Kpler, a 677,000 barrel cargo of Sokol crude from Sakhalin I arrived at Par Pacific's Kapolei, Hawaii, refinery March 3.

Volumes of Russia crude heading to the US ticked up in mid-February as prices dropped. But volumes dropped off by late February as political tensions rose. Shipments of Russian ESPO crude to US West Coast refiners averaged about 150,000 b/d between Feb. 15 and Feb. 22, with most headed to Marathon's Anacortes, Washington, refinery, according to US Customs data.

As USWC refiners phase out Russian crude, replacements include a variety of crudes, including Argentina's Medanito currently heading to Pacific Northwest plants.

On the US Atlantic Coast refiners had been buying Russian Urals crude as the price weakened as geopolitical tensions rose. Monroe Energy and PBF Energy had both been buyers of Urals. However, they too have opted for Latin American crude as Platts cFlow trade flow analytic software by S&P Global Commodity Insights shows a cargo of Medanito crude expected to arrive in Philadelphia March 5.

Operators of Jones Act Tankers, which are vessels built in the US, owned by a US entity, and crewed by US citizens, have noted a "marked pickup in inquiry in the past week."

This is attributed to the imminent SPR release, some hedging by USAC refiners to allow US crude to be substituted for imported crudes, and some product pricing dislocations that have allowed US Gulf Coast product to be moved into New York Harbor, said one Jones Act tanker operator.

"At the moment, demand for Jones Act tankers and [Articulated Tank Barges] is quite strong and the market is tightening," he said.