U.S. Imports of Latin American Oil Surge as Refiners Substitute Russian Barrels, According to Reuters

By Arathy Somasekhar

HOUSTON (Reuters) – In April, U.S. refiners imported approximately 1.3 million barrels per day (bpd) of crude and fuel oil from Latin America, marking the highest volume in seven months, as buyers sought alternatives to Russian supplies.

Following the U.S. ban on imports of Russian crude and refined products in March due to the invasion of Ukraine, companies were encouraged to establish "friend-shoring" supply chains, focusing on sourcing from trusted nations.

Last year, Russia accounted for around 135,000 bpd, or 5.5% of total imports, and 155,350 bpd, or 29%, of fuel oil imports. Russian crude imports reached an all-time high in 2021, largely driven by production disruptions caused by hurricanes, according to data from the Energy Information Administration.

Fuel oil imports from Latin America averaged about 200,000 bpd in March and April, a 49% increase compared to the previous year. Mexico’s contribution to U.S. fuel oil imports rose to approximately 27% during this period, compared to 19% a year prior.

Around 15 vessels delivered 159,000 bpd of Mexican fuel oil to various states, supplying major companies in the industry.

"The interesting trend has been Mexico’s ability to capture market share from Russia," noted energy strategist Clay Seigle, adding that the U.S. market for Russian fuel oil has likely been permanently lost.

On the crude side, U.S. imports of Latin American crude also increased in April to 1.34 million bpd, the highest level in six months. Imports from Argentina reached a four-year peak, while those from Colombia hit their highest numbers since September 2020.

Argentina’s light sweet Medanito crude was delivered to refineries in California and Washington, while approximately 1 million barrels of the country’s medium Escalante crude arrived at a facility in Honolulu. The President of Par Hawaii indicated that oil from North and South America was effectively meeting Hawaii’s processing needs, as the company historically sourced 20%-25% of its oil from Russia.

Additionally, around 1.8 million barrels of Colombian oil were sent to processors, including refineries in Delaware and Louisiana. Colombia recently announced plans to boost its oil exports to the U.S. by approximately 40,000 bpd by the end of the year.

Major refiners declined to comment, but Valero and PBF mentioned they would increase imports from Latin America, citing concerns over feedstock shortages.