OPEC’s reduced oil production and US sanctions on Venezuela and Iran have translated into a considerable fall in crude imports into the Louisiana Offshore Oil Port so far this year.
January to date, 8 million barrels of crude have been delivered at LOOP’s delivery point in Morgan City, Louisiana, down 66% from the 24 million barrels recorded in the same period of last year, according to the latest S&P Global Platts Analytics and US Customs Bureau data.
In early January, OPEC members committed to cut production levels in line with 1.2 million b/d in the first six months of 2019. As a result, volumes exported by some of its members to the US have diminished to historic levels.
In January and February, for example, there have been no imports of Saudi crude to LOOP. The last Saudi cargo it received, some 1.6 million barrels of Arab Light, was unloaded December 19. However, LOOP has gone longer stretches without receiving Saudi crude in the past: none was received from that country for the first five months of 2018.
The lack of Saudi crude coming into LOOP – and the US Gulf Coast more broadly – is a stark contrast to previous years, when Saudi Arabia was a major supplier.
Some 7 million barrels of Saudi crude was imported at LOOP in 2018, a steep fall compared with 42 million barrels imported in 2017 and 81 million barrels in 2016, the US Customs data showed.
Saudi Arabia typically exports Arab Extra Light, Arab Light, Arab Medium and Arab Heavy at LOOP, with ExxonMobil and Marathon Petroleum on the buying side, according to the same data.
For the US Gulf Coast region in general, some 146 million barrels of Saudi Arabian crude was imported in 2018. That is compared with the nearly 200 million barrels that were imported into the region in 2017.
Middle East alternatives
Since fewer Saudi barrels are arriving in the US, Iraqi and Kuwaiti grades have been imported to replace some of them.
Iraq was the main exporter of crude delivered at the port of Morgan City with 60 million barrels in 2018, which is 6 million barrels higher from 2017. Andeavor, which was later bought by Marathon, was the buyer of most of those Iraqi barrels.
However, so far in 2019, the volume imported at LOOP from Iraq amounted over 5 million barrels, which is below the 16 million imported in the same period of 2018.
A similar situation can be seen with Kuwait, the second-largest exporter to LOOP in 2018, after delivering 11 million barrels in 2018. However, in the first two months of 2019, only one cargo with 963,443 barrels of Kuwait crude has been reported, below 6 million imported in the same period of 2018, the US Customs data showed.
Latin American volumes fall
In addition to the fewer Saudi barrels available in the US, there have also been dwindling crude imports from Venezuela and Mexico as production has stagnated.
Imports of Mexican Maya crude into LOOP amounted to about 6 million barrels in 2018, flat from 2017. However, only 1 million barrels have been recorded in 2019 at the Morgan City area, according to the US Customs data. Mexico is the top crude exporter to the USGC in general.
Separately, US refiners in the LOOP region imported nearly 3 million barrels of Venezuelan crude in 2018, down sharply from 8 million barrels recorded in 2017. The last cargo of a Venezuelan grade delivered at the LOOP was October 12, 2018, with Marathon Petroleum as the buyer.
On January 28, the Trump administration imposed sanctions on Venezuela’s state PDVSA, amid political tensions between US and Venezuela. The decision has been anticipated to cut nearly 500,000 b/d of Venezuelan crude exports to the USGC. As a result of the short supply, sour crude prices along the USGC have skyrocketed in recent months. Front-month Gulf Coast medium sour crude Mars reached its strongest differential in recent history on February 14, when it was assessed at an $8.10/b premium to WTI cash. The differential has not been higher since January 22, 2014, when it was at WTI plus $9.30/b.
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