Medium and heavy crudes highlight Americas October crude flows
Americas emerge as the marginal supplier in a tight global crude market with medium and heavy grades from the region in the limelight.
US seaborne crude exports have continued their dream run, with YTD exports increasing by 20% over full year 2022 volumes. While exports look strong, imports of crude into the US Gulf Coast have declined from a July peak amid seasonal refinery turnarounds. The temporary lifting of sanctions on Venezuelan oil & gas has been another highlight this month. Elsewhere in the Americas, medium-sweet crudes from Brazil and Guyana are increasing their share in European imports, pushing out barrels from West Africa.
Exports from Houston make a comeback, steady imports from Venezuela
October remained a month of strong US crude exports, whereas autumnal refinery maintenance season on the US Gulf Coast led to declines in sour crude imports. Increased exports from ports of Houston, Beaumont and Freeport were driving US crude exports in October. As exports from these ports increased, exports from Corpus Christi decreased by 400kbd m-o-m. Another thing to note is that exports from Beaumont almost doubled m-o-m to 460kbd which in turn has led to an increase in sour crude exports from the US. The majority of heavy sour Canadian crudes exported from the US are loaded from Beaumont. As a result, the share of sour crude in October exports from the US was 13%, led mainly by Canadian grades.
PADD 3 sour crude imports declined by 20% m-o-m in October with imports from Saudi Arabia falling to their lowest levels in the past year. Even though imports from elsewhere have declined, mainly as Gulf Coast refiners undergo their seasonal turnarounds, imports from Venezuela have remained not only steady but also increased to 170kbd in October.
Last week the United States announced a far-reaching but not complete lifting of sanctions on Venezuela’s oil & gas sector, limited for now to a period of six months. This essentially allows Venezuela’s PdV to resume exports to the US and other destinations. Earlier this year, Chevron was given a waiver to resume operations at its joint venture with PdV and European refiners Repsol and Eni were allowed to take crude in exchange for debt. With the geopolitical turmoil in the Middle East and Russia and domestic elections coming up, US authorities are evidently keen to unlock a nearby supply source.
Medium-sweet crudes from Brazil and Guyana head to Europe
Moving over to Europe, October data suggests an increase in crude imports from the Americas. The share of medium sweet crude in these imports also increased to 27% led by crudes from Brazil and Guyana. This preference for medium sweet grades by European buyers still comes, as they looked for Urals replacement after the Russia-Ukraine conflict. OPEC+ production cuts have only helped this and in October, Europe imported 480kbd and 280kbd of crude from Brazil and Guyana respectively. Imports from Guyana are expected to increase as the 220kbd Payara project comes online later this year.
With the Americas having been the dominant marginal supplier for a tight global crude market over the last 1-2 years, the new developments in Venezuela and Guyana will be welcomed. The Venezuelan sanctions relief also means more competition in the Gulf Coast markets for other sour grades from Mexico and Canada. With various buyers likely to be interested in Venezuelan grades, China, which imported 300kbd of Venezuelan crude last year, is likely to lose market share. Barrels may land instead in the US, Europe and India – a traditional buyer before sanctions. Meanwhile, Chinese buyers may tap even more into the Iranian pool, which remains a largely exclusive source.