For decades, Russia played a crucial role as a major supplier of crude oil and refined products to Europe, particularly in its western and southern regions. The primary export grade from Russia, Urals, a medium-sour crude oil, catered to the needs of many European refineries. However, a significant shift occurred in early 2022 when Russia invaded Ukraine, leading to sanctions from the European Union (EU) and other nations. In response, the EU imposed a ban on Russian crude oil imports in December 2022, followed by a ban on refined products in February 2023. This blog explores how Europe managed to replace Russian crude oil with alternative sources, focusing on contributions from the U.S. and the Middle East.

Before the sanctions, Russian exports of crude oil and refined products to Europe averaged about 4.7 MMb/d in 2019, constituting approximately 38% of total European imports. However, by February 2023, total Russian volumes into Europe had plummeted by 75% to only 1.1 MMb/d, representing less than 10% of the long-haul barrels supplied.

The remaining Russian volumes primarily comprised crude oil, accounting for around 60% of total imports. Both pipeline and waterborne supplies dropped significantly by February 2023, as most European countries ceased buying Russian crude oil.

To fill the gap left by Russian crude oil, Europe turned to a combination of different sources with varying quality and price characteristics. The breakdown of crude oil imports into Europe by source region (excluding Russia) in 2019 and 2023 reveals notable changes. The most significant increase came from the U.S., which boosted exports to Europe from 0.8 MMb/d in 2019 to 1.8 MMb/d in 2023, marking a growth of 125%. The U.S. became the second-largest supplier of crude oil to Europe, following the Middle East, which also increased its exports from 2.9 MMb/d to 3.4 MMb/d, a growth of 17%. Africa and Latin America also contributed to the increase, with growth rates of 13% and 14%, respectively. The North Sea was the only region that experienced a decline in exports to Europe, dropping by 9% due to natural decline and maintenance.

The U.S. was able to increase exports to Europe by tapping into its abundant production of light-sweet crude oil from shale plays, such as the Permian and the Bakken. Grades like WTI and Bakken, with API gravity ranging from 38 to 44 and sulfur content ranging from 0.2% to 0.4%, offered similar or higher quality than Urals. Moreover, these U.S. grades had lower transportation costs, as they could be shipped directly to Europe via tankers without the need for reverse lightering or pipeline tariffs. U.S. crude oil exports to Europe were primarily destined for the Northwest Europe market, competing with North Sea grades and other light-sweet grades from Africa and the Middle East.

The Middle East also increased its exports to Europe, mainly supplying medium-sour grades like Arab Light and Basrah Light, which have similar quality characteristics to Urals. These grades were primarily destined for the Mediterranean market, where they competed with other medium-sour grades from Africa and Latin America.

Other regions that contributed to increased exports to Europe, such as Africa and Latin America, supplied a mix of light-sweet and medium-sour grades based on demand and price signals from different European markets. Notable grades that gained market share in Europe included those from Nigeria, Equatorial Guinea, Angola, Brazil, and Ecuador.

In summary, Europe successfully replaced Russian crude oil with alternative sources from the U.S., the Middle East, Africa, and Latin America. The U.S. emerged as the second-largest supplier of crude oil to Europe, leveraging its shale boom and light-sweet quality. The Middle East maintained its position as the largest supplier, providing medium-sour quality. Overall, this diversification enhanced Europe’s energy security, reducing its dependence on Russian crude oil.