U.S. oil refiners use Iraqi, Canadian crudes to replace storm losses -traders

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A view of the ExxonMobil Baton Rouge Refinery in Baton Rouge, Louisiana, U.S., Could 15, 2021. REUTERS/Kathleen Flynn/File Photograph

HOUSTON, Sept 23 (Reuters) – U.S. oil refiners searching to interchange storm-lost U.S. Gulf of Mexico crude have been turning to Iraqi and Canadian oil, whereas Asian patrons have been pursuing Center Jap and Russian grades, analysts and merchants mentioned.

Royal Dutch Shell , the biggest producer within the U.S. Gulf of Mexico, this week mentioned injury to an offshore switch facility will restrict Mars bitter crude provides into early subsequent yr. The Mars bitter grade of U.S. oil is used closely by U.S. Gulf refiners and firms in South Korea and China, two high locations for U.S. crude exports.

The USA now usually exports greater than 3 million barrels of oil per day, most from the U.S. Gulf Coast. With total gasoline demand rebounding to pre-pandemic ranges, refiners might want to make up for the Mars shut-ins.

The lack of as much as 250,000 barrels per day (bpd) has some U.S. refiners looking for replacements for fourth-quarter supply, particularly Iraq’s Basrah crude, merchants mentioned. Others acquired provides of bitter crude from U.S. storehouses.

Basrah crude has come to the fore throughout previous disruptions. In 2019, when U.S. sanctions on Venezuela minimize off heavy crude grades to Gulf refiners, Iraq quickly boosted cargoes. Canadian heavy-oil suppliers additionally benefited.


Exxon Mobil and Placid Refining Co have acquired oil from the U.S. Strategic Petroleum Reserve (SPR), addressing rapid wants for bitter crude.

“Refiners that wanted to particularly change Mars barrels requested bitter crude from the SPR. Many others are shopping for additional cargoes of Basrah for October supply, whose costs had been very handy as bitter crudes on the whole are beneath stress,” a U.S. Gulf crude dealer mentioned.

Earlier this month, Mars crude traded as excessive as a $1.50 premium over WTI however on Wednedsay it was supplied at a $2.25-per-barrel low cost to the U.S. benchmark , returning to pre-storm ranges. Many of the 9 U.S. refineries that halted output throughout Ida have returned to manufacturing.

Refiner Marathon Petroleum purchased Basrah for October loading, one dealer mentioned. Refiners in a position to course of and mix heavier crudes even have proven curiosity in Canadian and Latin American grades, merchants added. Marathon declined to remark.

U.S. Power Info Administration preliminary information via Tuesday confirmed imports from Mexico and Brazil rising after the storms.


Of the as much as 250,000 bpd of misplaced Mars crude manufacturing, about 80,000 bpd usually are despatched to Asian refineries, in keeping with cargo monitoring agency Vortexa.

South Korea has accounted for about two-thirds of Mars exports this yr, mentioned Kpler oil analyst Matt Smith. China’s Unipec and South Korea Power boosted Mars purchases forward of the storm to benefit from favorable costs.

Unipec lately purchased 200,000 tonnes of Russia’s Urals crude for October supply amid a broader weak point in worth differentials.

South Korea’s second largest refiner, GS Caltex Corp, had a Mars cargo canceled that had been set to reach in late November, and the corporate has not but regarded for substitute crude, in keeping with merchants.

Unipec’s mum or dad, Sinopec, and GS Caltex didn’t reply to after-hours requests for remark.

Reporting by Arathy S Nair in Bengaluru, Marianna Parraga in Houston and Florence Tan in Singapore; Enhancing by David Gregorio


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