September 24, 2021 - 01:09 PM 527 views
U.S. oil refiners hunting to replace crude lost after a storm hit the U.S. Gulf of Mexico last month have been turning to Iraqi and Canadian oil, while Asian buyers have been pursuing Middle Eastern and Russian grades, analysts and traders said.
Royal Dutch Shell, the largest producer in the U.S. Gulf of Mexico, this week said damage from Hurricane Ida to an offshore transfer facility will limit Mars sour crude supplies into early next year. The grade is used heavily by U.S. Gulf refiners and companies in South Korea and China, the top two export destinations for Mars.
The United States generally exports more than 3 million barrels per day (bpd) of oil, most from the U.S. Gulf Coast. With overall fuel demand rebounding to pre-pandemic levels, refiners will need to make up for the Mars shut-ins.
The loss of up to 250,000 bpd has some U.S. refiners seeking replacements for fourth-quarter delivery, especially Iraq's Basra crude, traders said. Others received supplies of sour crude from U.S. storehouses.
Basra crude has come to the fore during past disruptions. In 2019, when U.S. sanctions on Venezuela cut off heavy crude grades to Gulf refiners, Iraq rapidly boosted cargoes. Canadian heavy-oil suppliers also benefited.
Exxon Mobil (NYSE:XOM) and Placid Refining Co have received oil from the U.S. Strategic Petroleum Reserve (SPR), addressing immediate needs for sour crude.
"Refiners that needed to specifically replace Mars barrels requested sour crude from the SPR. Many others are buying extra cargoes of Basra for October delivery, whose prices were very convenient as sour crudes in general are under pressure," a U.S. Gulf crude trader said.
Earlier this month, Mars crude traded as high as a $1.50 premium over U.S. benchmark West Texas Intermediate (WTI) but on Wednesday it was offered at a $2.25-per-barrel discount, returning to pre-storm levels. Most of the nine U.S. refineries that halted output during Ida have returned to production.
Refiner Marathon Petroleum (NYSE:MPC) has bought Basra for October loading, one trader said. Suezmax tanker Jag Leena is provisionally booked to load 1 million barrels of Basra Light crude on Oct. 10 for the United States, data on Refinitiv Eikon showed, although it was not immediately clear which company chartered the ship.
U.S. refiners able to process and blend heavier crudes also have shown interest in Canadian and Latin American grades, traders added. Marathon declined to comment.
Disclaimer: DitsIntelligence would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All stocks, indexes, futures and market prices are not provided by exchanges but rather by market makers, so prices may not be accurate and may differ from the actual market price. Therefore DitsIntelligence doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.