Europe turning to Russia for oil amid US sanctions on Venezuela, Iran: report

U.S. sanctions on oil from Venezuela and Iran have played into Russia's hands on energy policy, according to a new analysis that found that refiners have turned to Russian exports to fill the gaps.

Reuters reported Friday that U.S. sanctions on oil from the two countries has led to a global shortage of "sour" oils, described as heavier than oil produced from countries such as the U.S., which is experiencing record oil production of variants described as lighter and sweeter than its Russian, Venezuelan or Iranian competition.


The drop in availability of Iranian or Venezuelan exports — which are largely untouchable due to pressure on foreign companies from the State Department — has led to a scramble among buyers for Russian-manufactured Urals oil.

“Urals is anchored in a positive zone versus dated Brent [a classification of lighter, sweeter oil] and there is no indication it will fall to a discount any time soon,” one European analyst told Reuters.

The surge in buyers searching for Urals oil has led to Russian companies reportedly making $140 million more last month than they did in October. A large new refinery in Turkey, built to run on sour oil, is likely to exacerbate the situation, analysts said.

“One expected STAR’s launch to be a serious jolt for the market, but little did we know it would make the sour shortage this bad ... refiners are rushing for sours,” one oil trader told Reuters of the refinery's operations.

Traders are now seeking an alternative to Russian sour oil and have not yet come up with a solution.

“All refiners are looking for Urals or a Urals replacement,” one trader said. “And we see that it won’t be enough for everyone.”