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The U.S. decision to ban imports of Russian oil is likely to worsen Russia’s struggles to sell its cargoes as buyers will avoid Russian crude even more than they have been doing so far, traders told Reuters after U.S. President Joe Biden said on Tuesday America is banning Russian energy imports immediately.
The ban includes not only Russian oil, but also coal and liquefied natural gas (LNG). The United States, which imports around 500,000 bpd of Russian crude and products, can afford to ban imports from Russia without severe consequences on its industry and economy, unlike Europe.
Although the U.S. ban will directly hit only a small amount of Russian oil exports, the indirect hit could be much higher because a growing number of traders and buyers will be shunning Russian crude due to “self-sanctioning” and reputational risks.
Case in point—last week, Shell came under severe criticism for saying it had made the “difficult decision” to buy a cargo of Russian crude oil.
This week, Shell said it would stop all spot purchases of Russian crude in an immediate first step of withdrawing from involvement with any Russian crude oil, refined products, gas, and LNG.
“We are acutely aware that our decision last week to purchase a cargo of Russian crude oil to be refined into products like petrol and diesel – despite being made with security of supplies at the forefront of our thinking – was not the right one and we are sorry,” Shell’s CEO Ben van Beurden said in a statement on Tuesday.
TotalEnergies, for its part, has instructed its traders not to buy Russian oil after Russia invaded Ukraine.
“My traders don’t take any more oil from Russia since the beginning of the crisis,” TotalEnergies CEO Patrick Pouyanné said on the CERAWeek by S&P Global conference in Houston this week, as quoted by Bloomberg.
According to JP Morgan, some 70 percent of Russia’s seaborne oil is struggling to find buyers.
“Shipping disruptions in the Black Sea have brought trade deals with the country to a virtual standstill,” JP Morgan said, quoted by Reuters.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.