Imports of fuel oil from Latin America surge ahead of Russia’s planned reduction

According to customs statistics, record amounts of fuel oil from Latin America arrived in the United States in March, as refiners sought alternatives to Russian feed stocks ahead of Washington’s April 22 deadline to cease Russian oil imports. Last month, US Gulf Coast refiners that rely on fuel oil to augment heavy crude were on the lookout for alternative supply when US President Joe Biden imposed a 45-day ban on Russian crude and processed goods.

Last year, Russia supplied almost a quarter of the 524,400 barrels per day (bpd) of fuel oil imported by the United States. It also delivered 200,000 barrels per day of oil, principally to refiners on the East Coast of the United States. According to customs statistics, Russia’s share of fuel oil, blend stock for fuel oil, and vacuum gasoil (VGO) imports decreased to 20% last month, while Latin American nations – led by Mexico – delivered 35% of imports, up from 20% last year.
The Middle East’s percentage of U.S. fuel oil imports is also expected to climb, to around 17% from 5% a year ago. Record Latin American fuel oil shipments of roughly 216,000 bpd come as US and Venezuelan officials explore possible sanctions relief that would allow Venezuelan oil to flow back to the US after a three-year hiatus. Prior to the restrictions, the United States bought 4% of its fuel oil needs from Venezuela.

Mexico, which has increased its fuel oil exports over the last three years, accounted for 26 percent of U.S. fuel imports in March, compared to 18 percent in 2021, according to customs statistics. Pemex, Mexico’s state-owned oil corporation reported a small rise in total fuel oil exports to 175,300 bpd in February, up from 170,600 bpd the previous month. According to a person familiar with the situation, Pemex intends to keep exports between 175,000 and 200,000 bpd in the next months.

According to customs and Refinitiv tanker tracking data, at least three tankers carrying fuel oil and oil byproducts from Mexico have docked at U.S. ports this month, with another on its way. Pemex did not respond to a comment request.

Brazil’s state-owned Petrobras says demand for Brazilian fuel oil from Gulf Coast refiners in the United States has increased. According to the business, Brazil, Mexico, Algeria, and Saudi Arabia are replacing Russia as the primary exporters of fuel oil to the Gulf Coast. Petrobras stated that it has been acquiring new clients in the Gulf Coast fuel oil sector in the United States. It stated that it had sold around 500,000 tonnes of Brazilian fuel oil on a spot basis to Gulf Coast refineries in the United States this year.

According to US Customs and Refinitiv cargo tracking data, one shipment landed in the US Gulf in February, and another comparable cargo is scheduled to discharge in April. If state-run Petroecuador agrees to medium-term contracts with refiners, the United States might witness an increase in oil imports from Ecuador.