Latam’s oil trade is being rerouted by the Middle East crisis
Medium and heavy crude is the market’s real shortage Middle Eastern supply outages have pushed the global crude balance into a deficit of roughly 1 to 2 million b/d, with these outages driving down the availability of heavier grades in particular. Alternative sources of medium-density supply are increasingly scarce. Europe, which lacks domestic medium-density crude ...
The Middle East crisis is causing a shift in Latin America's oil trade, as traditional sources of medium-density crude become scarce. Europe, heavily reliant on imports, is struggling to fill the gap, as seen in recent disruptions at the Yanbu and East-West pipeline. Venezuela's medium-yielding barrels have become increasingly valuable, following the recent disruptions, as they are one of the few alternatives available.
High middle distillate cracks, along with a potential US diesel export ban, are driving up demand for heavier grades globally. Argentina and Guyana are pulling in opposite directions from Brazil, as Vaca Muerta's growth accelerates in Argentina and Brazil's supply plateaus near current output levels. Guyana's growth is expected to accelerate as its latest FPSO comes online.
Brazil's temporary 12% export tax cut to the EU has diverted flows from China to Europe. However, Venezuela remains a wildcard, requiring significant capital and time to increase output. Ethanol is helping to fill Latam's gasoline gap, as rising regional crude supply and lighter maintenance schedules are expected to sustain refinery growth into next year.
US export volumes in diesel have increased significantly, drawing down US inventories and creating a reliance on the US for this product. The Panama Canal is crucial for West Coast Latam's diesel imports, with El Nino-driven drought risk slowing transits and raising costs. A full US export ban is unlikely, but export controls are a live discussion, leaving the region with no reliable replacement for US volumes.
Written by urgent.news from Hellenic Shipping News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.