Russia emerges as 2nd biggest foreign oil supplier to US

Washington, DC

RUSSIA is supplying more oil to the United States than any other foreign producer aside from Canada as American refiners scour the globe for petrol-rich feedstocks to feed surging motor-fuel demand.

US imports of crude and refined petroleum products from its former Cold War adversary surged 23 per cent in May to 844,000 barrels a day from the prior month, government data showed.

Mexico was edged out of the No 2 spot as its shipments to its northern neighbour rose by less than 3 per cent.

Russia has become a favoured source for US fuel makers largely because it produces ample supplies of semi-refined oils such as Mazut 100, an ideal feedstock for American refineries accustomed to processing thick, sludgy crude from Venezuela and the Middle East.

Cargoes from the former dried up due to sanctions, and Opec-orchestrated output limits have crimped shipments from the latter, leaving an opening for Russian exporters.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

The rise in Russian shipments is happening despite intensifying rancour between Washington and the Kremlin over a controversial pipeline that will haul Siberian gas to Germany.

But in the absence of actual sanctions, US companies are not bound by the diplomatic and geopolitical goals of the White House.

Russian feedstock "seems to be functioning as a good substitute for Venezuelan oil, particularly in the high-demand summer season," said Shirin Lakhani, director of global oil service at Rapidan Energy Group.

Despite Russia's ascendence, it's no threat to Canada's preeminence as the largest foreign crude supplier to the world's biggest economy.

In fact, Canada accounts for almost half of US imports, delivering almost five times as much as Russia, the data showed.

Nevertheless, the importance of the US market looms large in Moscow, where Federal Customs Service records show America is the single largest buyer of the nation's heavy-oil products, the category that includes Mazut 100.

US buyers absorbed almost one-fifth of Russian heavy-oil exports during the first five months of the year.

Most of the US-bound Russian crude has docked along the West Coast to feed refineries like Phillips 66's plant 160 kilometres north of Seattle and California refineries owned by Chevron and Valero Energy, government data showed. BLOOMBERG