U.S. refiners are seeking relief in other crudes after Hurricane Ida and Hurricane Nicholas disrupted the supply chain. The loss of Mars crude, mainly produced in the U.S. Gulf Coast, has pushed refiners into seeking Iraqi, Canadian and Latin-American oil.
As we reported previously, Royal Dutch Shell’s West Delta platform sustained damage that will tight the supply of Mars crude early into next year. The West Delta platform also served as a transfer facility for Mars crude. Consequently, the shutting down of the platform will limit the supply.
Moreover, Mars crude oil is a sour crude heavily used by U.S. Gulf refiners and companies in South Korea and China. In fact, these two are the top two destinations for Mars exports. After the hurricanes disrupted the supply chain, the U.S. Gulf Coast lost up to 250,000 barrels per day. While, commonly, it exports around 3 million barrels per day.
As a result, refiners around the world and also in the U.S. face the need to offset the Mars shut-ins. Consequently, refiners are looking for relief in the Basara crude, produced in Iraq. According to Reuters, Basara 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.
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U.S. refiners booking for Basa crude
However, Canadian oils and Latin-American crudes, like the Pemex Mix, of Mexico, are also on sight. U.S. Gulf crude trader said. “Refiners that needed to specifically replace Mars barrels requested sour crude from the Strategic Petroleum Reserve. Many others are buying extra cargoes of Basra for October delivery, whose prices were very convenient as sour crudes, in general, are under pressure.”
Furthermore, Marathon Petroleum is among the refiners acquiring Basara crude for October. Suezmax tanker Jag Leena is also provisionally booked to load 1 million barrels of Basra Light crude on Oct. 10, according to Refinitiv data. On the other hand, the U.S. Energy Information Administration said that Mexico’s mix and crude from Brazil are also rising exports.
Finally, in Asia, refiners are seeking relief in crudes from the Middle East and Russia. In fact, of the 250,000 barrels of Mars crude lost, about 80,000 typically goes to Asian refiners. “All types of medium sour crude can replace Mars such as Oman, Urals, and Basra, depending on refinery configuration,” a trader with a Chinese firm said. Unipec, for example, bought 200,000 tonnes of Russia’s Urals crude for October delivery.
