The Daily Journal — U.S. refineries are increasing their purchases of Venezuelan crude oil, putting imports on track to reach their highest level in nearly a decade, according to a report by Bloomberg. Refineries along the U.S. Gulf Coast have stepped up acquisitions to secure heavy crude supplies as wildfires in Canada threaten logistics and production.
Bloomberg data indicate that “Venezuelan crude imports are on track to reach 804,000 barrels per day in cargoes arriving during July, the highest level since 2017.” Shipments to the United States resumed earlier this year after sanctions imposed in 2019 brought commercial trade to a halt.
Rising prices and replacement for Canadian crude
Growing demand from U.S. refiners has pushed Venezuelan crude prices higher along the Gulf Coast. Bloomberg reported that “in May, Venezuelan crude traded at a discount of $15 per barrel to ICE Brent. That discount has now narrowed to about $10, according to people familiar with the market.”
Refineries from Texas to Louisiana are running at full capacity and have turned to Venezuelan crude to shield operations from potential disruptions in Canadian supply, as both grades share similar density and quality characteristics. Bloomberg noted that Canada’s dry weather conditions “can trigger wildfires that force worker evacuations, reduce production, and even lead to force majeure declarations by disrupting oil deliveries to refineries.”
At the same time, North American refiners continue to enjoy strong processing margins. The Gulf Coast 3-2-1 crack spread, a key profitability benchmark, reached its highest level since at least 2012 last week, supported by low fuel inventories and operational disruptions across global markets.
Caribbean inventories decline
Higher U.S. purchases have also reduced crude inventories stored in the Caribbean. According to Bloomberg, “stockpiles in the Caribbean have gradually declined because China, previously the largest buyer of Venezuelan crude, has not purchased any Venezuelan oil so far this year.”
Regarding distribution, Bloomberg reported that “commodity trading giants Trafigura Group and Vitol Group now market most Venezuelan crude.” The firms assumed responsibility for the international commercialization of Venezuelan oil following the political developments earlier this year.
