The United States should embargo oil from Russia and Organization of the Petroleum Exporting Countries (OPEC) nations in response to their efforts “to distort energy markets,” according to Sen. Kevin Cramer (R-ND).
In a letter to President Trump Wednesday, Cramer, who represents the United States’ second most prolific oil-producing state, urged the administration to implement through the Trade Expansion Act of 1962 an oil embargo against Russia, Saudi Arabia, Iraq and other OPEC members.
“In 2018, the United States imported nearly 1.5 million b/d from the three aforementioned countries,” Cramer wrote. “Today, these same nations expect our producers and workers to absorb these impacts without recourse. We must send the immediate signal; the United States will not be bullied or taken for granted.”
Earlier this month, Saudi-led OPEC recommended members and allies reduce oil output through the rest of the year, beyond a voluntary deadline of March 30, with additional reductions through June. However, ally Russia balked, leading Saudi Arabia Oil Co., aka Aramco, to cut prices and basically launch a price war.
U.S. production is forecast to “bear the largest impacts” through 2021 from the price war and economic impacts of the coronavirus pandemic, IHS Markit researchers said Monday. U.S. oil output alone is forecast to crater by 2-4 million b/d over the next 18 months.
The latest impact of the price war came Thursday, when Harold Hamm, executive chairman of Continental Resources Inc., said a 55% decrease in that Oklahoma City-based company’s capital spend “has been precipitated by the collapse of crude oil prices due to the market manipulation of Saudi Arabia and Russia.”
Nations “are now using the environment of the worldwide spread of Covid-19 to flood the market and cripple our domestic energy producers,” Cramer wrote. “Unfortunately, these bullying tactics by Russia have become the norm, but the actions of our close strategic partner Saudi Arabia are particularly concerning. Saudi leaders have long claimed to be a stabilizing force in world oil markets where the kingdom, the U.S. and our allies are better off. However, these actions have set off elevated volatility and drastic price declines in oil markets.
“Whether Russia, Saudi Arabia or other OPEC producers, these actions are unacceptable.”
Last Saturday President Trump ordered the Department of Energy (DOE) to purchase 77 million bbl of U.S. crude to fill the strategic petroleum reserve (SPR) to its maximum capacity. DOE announced a solicitation Thursday to purchase an initial 30 million bbl of sweet and sour crude to begin filling the SPR.
“DOE is moving quickly to support U.S. oil producers facing potentially catastrophic losses from the impacts of Covid-18 and the intentional disruption to world oil markets by foreign actors,” said Secretary Dan Brouillette.