Amid the ongoing debate in the U.S. about the wisdom of banning the importation of Russian petroleum, roughly 5-10 percent of total U.S. petroleum imports (crude oil and refined products), it is perhaps unsurprising that some basic principles are being forgotten, unfortunately a ubiquitous characteristic of Beltway analyses. In particular: A U.S. ban on the importation of Russian petroleum would have little effect on global prices and Russian export earnings, while the imposition of sanctions on the financial flows created by Russian petroleum sales might yield impacts far more important.
Because the market for petroleum is global, a U.S. ban on importation of Russian crude oil would result in a reallocation of such deliveries among importers. The U.S. would import less (or no) Russian crude oil, which then would be sold to other markets not cooperating with the U.S. ban, perhaps with some price discounting and likely with some increase in transport costs. Russian crude oil ranges from API gravity (resistance to flow) 44.7 and sulfur content 0.16 percent to API 30.6 and sulfur content 1.48 percent. (Crude oil becomes more valuable as the API gravity increases and as the sulfur content decreases, essentially because such lighter and “sweeter” crude oils yield a more valuable mix of refinery outputs.)
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