Oil traders were puzzled on Thursday, Jan. 31, after a shipment of 10,000 barrels of Russian oil entered the U.S., considering it’s banned.
According to data from the Energy Information Administration (EIA), posted on X by Bloomberg’s commodities editor Javier Blas, the Russian shipment entered the port of Wilmington, Delaware, on Nov. 3.
However, Executive Order 14066 — one of the sanctions that followed Russia’s attempt to invade Ukraine in February 2022 — banned the import of oil of Russian origin.
Blas thinks the Russian oil entered the U.S. through a loophole.
“The oil was shipped from Russia to the Bahamas before March 2022 — when the U.S. banned Russian imports,” he said.
While in the Bahamas it was blended with oil from other destinations — thus diluting its origin.
“So, technically, it is excluded from the ban. After 18 months in storage, it was shipped to the PBF Energy (NYSE:PBF) refinery in Delaware City.”
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Prices Hit By Fed Comments
Meanwhile, the price of oil was up on Thursday. It couldn’t fully recover the sharp sell-off the previous session after the Federal Reserve effectively ruled out a March interest rate cut.
Following the Fed’s open market committee (FOMC) meeting, at which rates were left at 5.25%-5.5%, Chairman Powell said he didn’t think a March rate cut would be likely.
The price of U.S. Nymex WTI oil fell 2.7% overnight, while Brent crude lost 1.4%. Both, however, were up by 0.8% on Thursday, with Nymex at $76.29 a barrel and Brent at $80.99.
The biggest exchange-traded fund to track the price of oil — the United States Oil Fund (NYSE:USO) — fell 2.6% on Wednesday. It rallied nearly 1% again Thursday to $71.60.
Weekly inventory data from the EIA was also a little bearish for oil prices, showing crude stocks increased by 1.2 million barrels in the week to January 26. The market was expecting a drawdown of around 0.2 million barrels.
Global production data also looked bearish. A Reuters report showed that, despite official quota cuts, OPEC output rose for a third successive month to 27.9 million barrels a day. Several countries including Iraq, Nigeria and Gabon pumped above their agreed quotas.
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