US Bans Russian Oil Imports

[myrdale]

All politics a side, I am curious if this actually has any teeth to it.

Being that there is a world market, what stops Russia from selling to China, then China selling to the the United States.

Or if we increase purchasing from another country who in turn sells less third country who in turn buys from Russia.

Is there actually any impact at the end of the day, other than higher prices for us?

[ua_guy]

There is. Russia's economy is being crippled right now. You think inflation is high here.....the Western response of sanctions and cancel-culture is absolutely working on Russia. Russia only supplies 8% of the global oil market. Investors don't want to touch Russian oil futures for fear of sanctions. It's tanking their export market, and that's one of the only industries they have left.... Where there is no money, there is no power.

[myrdale]

Investors don't want to touch Russian oil futures for fear of sanctions. It's tanking their export market,

But that is the question, just because the United States doesn't, what stops China, India or anyone else?

[ua_guy]

But that is the question, just because the United States doesn't, what stops China, India or anyone else?

It doesn't. But it does impact the market. Buyers are skeptical. China could buy more, but would likely want a financial incentive to do so as Russian oil only accounts for about 15% of its imports. Other countries may be buyers as well, but they have to have the ability/refineries to process the kind of oil that comes out of Russian territory. Other countries also have to tread carefully as the US could step in and punish them for supporting the Russian economy.

[bjl584]

I've heard that Russian oil isn't the best for making into gasoline.
It's like the oil that they drill around here in PA
Most of it ends up being motor oils, greases, and lubricants.

It's a global market, but a lot of companies are pledging not to buy Russian oil.
The idea is to shut down their economy and cut funding for their war efforts.
I'm not sure how long it would take for things to find equilibrium, or if they ever would.
You would think that eventually supplies and sourcing could be shifting elsewhere, but that takes time.
in the meantime, Russia goes bankrupt.

[ua_guy]

US oil company operations are currently sitting on 9,000 unused leases and are blaming the government for not allowing them more. They cite that permitting and EPA requirements are too onerous/costly to do exploration and for most of those leases it's not financially feasible, so why would they invest? Well then, why the heck would they want to buy more of those "worthless" leases that are too expensive to explore?

There is definitely more than one factor at play here. We are already energy independent in the sense that we are net exporters of oil, but we could produce a lot more if US energy companies would invest. When production was scaled back for covid and oil went negative, the restart and re-investment in production hasn't kept up with demand. There's russia to blame for this and the blame lands squarely on oil companies as well.

[kork13]

Geopolitics is tricky. There's alot of dynamics in play at the same time. To the example of China, for instance: China generally supports Russian exploits and tacitly condones their misbehavior. They're a major trading partner of Russia's. However, by association that relationship also taints the global image of China, and image is a BIG DEAL in China. On another level, consider the comparison of Ukraine v. Russia (former territory since independent, now doing a remarkable job at holding back the invading Mother Russia) against the similar dynamic of Taiwan v. China (former/"renegade" territory operating autonomously, and could likely hold at bay many scenarios of Chinese invasion). By all measures (this is just a couple), China is not pleased with the manner and progress and optics of what Russia is doing. So while China may not directly oppose Russia, they may also not hold out a lifeline, which in this case, is just as good.

[bjl584]

US oil company operations are currently sitting on 9,000 unused leases and are blaming the government for not allowing them more. They cite that permitting and EPA requirements are too onerous/costly to do exploration and for most of those leases it's not financially feasible, so why would they invest? Well then, why the heck would they want to buy more of those "worthless" leases that are too expensive to explore?

There is definitely more than one factor at play here. We are already energy independent in the sense that we are net exporters of oil, but we could produce a lot more if US energy companies would invest. When production was scaled back for covid and oil went negative, the restart and re-investment in production hasn't kept up with demand. There's russia to blame for this and the blame lands squarely on oil companies as well.

Several years ago I heard that if oil is under somewhere around $85 a barrel, then it wasn't worth drilling for in certain parts of the US. Leases would sit idle and the oil sat in the ground.
We are in a market now where it is worth drilling, but setting up a rig takes a lot of time.
I don't know if new drilling in the US is ramping up, but it isn't like throwing a switch.

There is a gas well operation near me, and it took close to a year to get it operational.

[ua_guy]

There is a gas well operation near me, and it took close to a year to get it operational.

No disagreement there. A good friend has an operation that they had to shut down during covid, and it takes time and significant expense to get it going again. Production on existing leases is stifled though, I haven't seen where they are producing at pre-pandemic levels yet. Everything I read says they have the ability to do it, but are hesitant, and are playing politics. That doesn't sit well with me as someone who pays at the pump.