US sanctions on Venezuela would hurt US Gulf Coast refiners

January 24, 2019

Sanctions against Venezuelan crude oil exports would represent a blow to US refiners on the Gulf Coast, according to Rystad Energy.

“Venezuela is very important for oil markets, not so much the sheer volumes but rather for the quality of their crude. Sanctions would make US Gulf coast refiners the biggest loser,” said Rystad Energy analyst Paola Rodriguez-Masiu.

Many refineries along America’s Gulf coast import Venezuelan heavy crude to mix with lighter oil coming out of shale basins such as the Permian in west Texas.

A bar chart showing the US imports of Venezuelan crude* by refinery in thousand barrels. Source: Rystad Energy research and analysis

“The combination of sanctions against Iran, declining oil production in Mexico and curtailments in Canadian oil will make US sanctions against Venezuela very disruptive, as the crude quality mismatch will grow even bigger,” Rodriguez-Masiu added.

Rodriguez-Masiu, a native Venezuelan who coordinates Rystad Energy’s global refinery and infrastructure data, added:

“Heavy oil usually trades at a discount to lighter grades. Now, however, Heavy Louisiana Sweet is trading at a premium to Light Louisiana Sweet. That shows just how tight the market for heavy oil has become. Sanctions could increase the premium for heavy crudes, and that would be fundamentally bad for US refiners.”

A bar chart showing Venezuela crude production by API gravity in Million barrels per day. API below 10 is considered heavy oil.

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Contacts

Paola Rodriguez-Masiu
Analyst, Oil markets
Phone: +47 24 00 42 00
Paola.Rodriguez-Masiu@rystadenergy.com

 

Morten Bertelsen
Media Relations
Phone: +47 951 98 742
morten.bertelsen@rystadenergy.com

 

About Rystad Energy

Rystad Energy is an independent energy research and business intelligence company providing data, tools, analytics and consultancy services to the global energy industry.

Our products and services cover energy fundamentals and the global and regional upstream, oilfield services and renewable energy industries, tailored to analysts, managers and executives alike.