According to a Reuters report, at least three sources noted that several trading houses are looking to supply Russian Urals crude to the U.S. Accordingly, this decision comes from the harm Hurricane Ida caused in August.
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Ida is indeed one of the most devastating hurricanes for oil companies operating in the U.S. Gulf of Mexico since storms in 2005. Thus, it led to prolonged halts in the area’s offshore oil output. For instance, about three-quarters of production remains shut.
Urals oil arbitrage – unusual in the U.S.
Trading firms, including Trafigura, Vitol, and Litasco, have therefore secured about 5 million barrels of Russian Urals for loading in September. Also, for delivery to the United States, the three sources told Reuters today.
In fact, as Reuters noted in its report, Urals oil arbitrage to the United States is unusual, with only a few cargoes shipped every few months.
In contrast, two of the sources said they expected more Urals cargo fixtures to be secured for delivery to the United States in coming days; particularly, as supply shortages hit U.S. refiners.
An increasing demand
Worth noting, Urals oil differentials jumped to a seven-month high this week amid increased demand for barrels to load in September. Additionally, hurricane Ida hit the output of sour U.S. grades, such as Mars, most heavily. Urals, which is also a sour grade, therefore provided a replacement for U.S. refiners.
“Urals is a good grade to fill supply gaps,” one trading firm source told Reuters. The source also said that it was available in the spot market and was of the right quality for many U.S. refiners.
Noteworthy, Royal Dutch Shell Plc (RDSa.L) canceled some U.S. export cargoes of Mars grade crude due to damage to offshore facilities. Lastly, the other source said Europe, China, and other areas that usually import U.S. oil were also seeking more Urals crude.
