A month and a half has passed since US sanctions restricted exports of Venezuelan crude to US refiners. Although the South American country is the biggest loser, refineries on the US Gulf Coast are also being significantly impacted.
US sanctions on transactions with PdVSA were imposed on January 28. Until then, Venezuela exported a large chunk of its heavy crude production to US Gulf Coast refineries. Those refineries are designed to process the heavy and viscous type of oil that Venezuela produces, but were forced to search for new alternatives.
Imports of Venezuelan heavy crude oil by US Gulf Coast refineries in February averaged 184,000 bpd, down 70 percent from the peak for February five years ago.
Other Latin American countries such as Mexico, Colombia and Brazil produce similar heavier crudes that US refiners can run. So far, however, our ClipperData show US Gulf Coast imports of heavy Brazilian crude in February averaged 22,500 bpd, compared to the five-year average of 74,000 bpd. As for heavier Colombian barrels, they averaged 90,000 bpd last month, about 43 percent lower than the five-year average.
Lower total heavy exports out of Brazil in January could offer an explanation to low US Gulf Coast arrivals last month. As for Colombian barrels, they have favored China instead, leaving US Gulf Coast refiners lacking.
Only Mexican deliveries have shown a clear sign of stepping up, posting the strongest gains of any heavy crude supplier to the region. Waterborne imports of Mexican heavy crude oil last month averaged 643,000 bpd, 15 percent higher than the five-year average for February and the highest level since August.
A saving grace for US Gulf Coast refiners last month may have been seasonal maintenance, reducing the demand for heavy barrels: heavy crude imports into the US Gulf in February were 15 percent lower than January. But this will change going forward as we move towards the start of driving season and higher demand. US Gulf coast refiners are going to have their work cut out in the coming months to find alternative barrels to plug the gap left by Venezuela.