U.S. fuel oil imports from Latin America jump ahead of Russia wind-down
Record volumes of fuel oil from Latin America landed in the U.S. in March, customs data showed, as refiners snapped up alternatives to Russian feedstocks ahead of Washington's April 22 deadline to end U.S. imports of Russian oil.
U.S. Gulf Coast refiners that use fuel oil to supplement heavy crude went hunting for new supplies last month after U.S. President Joe Biden placed a ban on Russian crude and refined products with a 45-day wind-down period.
Russia accounted for about a quarter of the 524,400 bpd of fuel oil the U.S. imported last year. It also supplied some 200,000 bpd of crude mostly to U.S. East Coast refiners.
Russia's share fell to 20% last month while Latin American countries - driven mainly by Mexico - provided 35% of imports of fuel oil, blendstock for fuel oil and vacuum gasoil (VGO), up from 20% last year, customs data showed.
Middle East suppliers' share of U.S. fuel oil imports are also set to rise, to about 17% from 5% a year ago.
Record Latin American fuel oil flows of nearly 216,000 bpd come as U.S. and Venezuelan officials have discussed a potential easing of sanctions that could return Venezuelan oil to the U.S. after a three-year pause. The U.S. imported 4% of its fuel oil needs from Venezuela in 2018, before the sanctions.
Mexico share expands
Mexico, which has expanded fuel oil exports for the past three years, accounted for 26% of the U.S. imports of the fuel in March, compared with 18% in 2021, customs data showed.
State-run oil company Pemex reported a slight increase in its overall fuel oil exports to 175,300 bpd in February, from 170,600 bpd the previous month. Pemex plans to maintain shipments between 175,000 and 200,000 bpd in the coming months, according to a person familiar with the matter.
At least three tankers from Mexico carrying fuel oil and oil byproducts have discharged at U.S. ports this month and another was on its way, customs and Refinitiv tanker monitoring data showed.
Pemex did not reply to a request for comment.
Brazil's state-controlled Petrobras said demand for Brazilian fuel oil from U.S. Gulf Coast refiners has grown. Brazil, Mexico, Algeria and Saudi Arabia are taking over from Russia as main suppliers of fuel oil for the Gulf Coast, the company said.
Petrobras said it has been developing new customers in the U.S. Gulf Coast fuel oil market. It said it has sold around 500,000 tpy of Brazilian fuel oil on a spot basis to U.S. Gulf Coast refineries.
One cargo arrived in the U.S. Gulf in February and another similar cargo is due to discharge in April, U.S. customs and Refinitiv cargo tracking data showed.
The U.S. could also see an increase in oil imports from Ecuador if state-run Petroecuador agrees to medium-term contracts with refiners.
(Reporting by Arathy Somasekhar, Marianna Parraga and Sabrina Valle in Houston; additional reporting by Ana Isabel Martinez in Mexico City; editing by Gary McWilliams and David Gregorio)
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