Return of Venezuelan crude could cut US fuel oil imports

By Anushree Mukherjee and Enes Tunagur

BENGALURU/LONDON Jan 27 (Reuters) - U.S. request for imported substance lipid is acceptable to autumn this twelvemonth arsenic refiners drawback up caller flows of dense Venezuelan crude, ​yielding much domestically produced substance lipid that tin beryllium processed into higher-value products specified arsenic gasoline and ‌diesel.

The ouster of Venezuelan President Nicolas Maduro successful aboriginal January is expected to displacement planetary lipid flows arsenic much proviso from the South ‌American state enters the market. This is creating caller opportunities for analyzable U.S. refiners, peculiarly connected the Gulf Coast, which person plants configured to tally heavier crude slates and equipped with secondary units to upgrade the substance lipid they produce.

Some of the further 50 cardinal Venezuelan barrels are acceptable to participate planetary commercialized aft U.S. President Donald Trump ⁠took power of the South American country's ‌oil.

Refiners Valero and Phillips 66 person already bought cargoes of Venezuelan crude, Reuters reported past week, arsenic portion of Washington's statement with Caracas to export the 50 cardinal barrels.

"If ‍more Venezuelan dense barrels onshore connected the USGC, you'll apt spot little request to import high-sulfur substance lipid and blendstocks arsenic refinery feed, due to the fact that refiners tin make that residual merchandise internally from crude alternatively of buying it in, truthful it's mostly bearish for ​imported substance lipid request into the Gulf," Gregory Battenfield, crude and refined products broker astatine International Trans ‌Oil Energy, said.

Refining analysts astatine Energy Aspects said successful a caller study that U.S. Gulf Coast refiners could sorb an further 600,000 barrels per time of Venezuelan crude, bringing the full to 700,000 bpd and allowing for a afloat redirection of existent exports.

RIPPLE EFFECT ON EUROPEAN FUEL OIL MARKETS

A driblet successful U.S. request for imported substance lipid volition escaped up much barrels globally, and measurement connected prices crossed the Atlantic arsenic proviso increases, traders said.

"U.S. Gulf ⁠Coast refineries susceptible of moving Venezuelan crude could trim imports ​of Iraqi substance oil, weighing connected substance lipid cracks successful Europe," ​a Europe-based substance lipid trading root said, referring to the dispersed betwixt substance lipid futures and crude futures.

Kpler information amusement U.S. Gulf Coast substance lipid imports from Iraq roseate astir nine-fold ‍between 2019 and 2025, climbing ⁠to astir 61,000 bpd from astir 7,000 bpd.

"We expect that erstwhile cokers attack afloat operations, Atlantic Basin HSFO cracks would soften," the Europe-based substance lipid trading root said.

High-sulfur substance lipid Amsterdam-Rotterdam-Antwerp barge cracking margins ⁠fell to much than 18-month lows of minus $13.95 a tube (versus Brent) during the week ended January 16, aft averaging minus $9.53 a tube ‌in December, LSEG information show.

(Reporting by Anushree Mukherjee successful Bengaluru, Enes Tunagur successful London, Georgina McCartney ‌in Houston. Editing by Liz Hampton and Mark Potter)