Russia overtakes Mexico to become 2nd largest US oil exporter... "Controls 10% of US oil market"

Increased Energy Dependence Amid US-Russia Confrontation
Venezuela Sanctions and OPEC+ Oil Production Limits Impact

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Despite the intensifying confrontation between the United States and Russia, Russia has reportedly overtaken Mexico to become the second-largest exporter of oil to the U.S. market. This is attributed to the reduction in U.S. oil imports from Middle Eastern countries due to production cuts by the major oil-exporting group OPEC+, as well as a decline in oil exports from Latin American countries caused by prolonged sanctions on Venezuela, leading to increased dependence on Russian oil.

According to Bloomberg News on the 4th (local time), based on the U.S. Energy Information Administration (EIA) data as of May this year, Russian oil accounted for 10% of the U.S. oil import market, making it the second-largest exporter after Canada (51%). Russia's oil exports averaged 844,000 barrels per day, a sharp increase of 56.8% compared to 538,000 barrels per day last year.

The significant increase in Russian oil exports to the U.S. despite deteriorating U.S.-Russia relations is analyzed to be due to a surge in domestic energy demand in the U.S. Bloomberg reported that travel demand, which was suppressed last year due to COVID-19, has increased, and summer heat has driven up electricity consumption, leading to a substantial rise in demand for oil used in power generation.

Additionally, production cuts by OPEC+ have reduced crude oil output from major Middle Eastern producers such as Saudi Arabia, which has also had an impact. According to Bloomberg, although Russia complies with OPEC+ production limits, most of the volumes it exports to the U.S. are semi-refined heavy oil, which is not subject to these restrictions.

U.S. companies are also reportedly favoring Russian semi-refined heavy oil, which is easier to refine and process. Sirin Lakani, chief oil analyst at Rapidon Energy, explained in an interview with Bloomberg, "Russian oil is better refined compared to the heavy crude from Latin American countries," adding, "Due to U.S. government sanctions and quality issues, imports of Venezuelan oil have significantly decreased, and Russian oil is playing a good role as a substitute."