More Venezuelan Crude for US

Despite a persistent decline in crude oil production, Venezuela has seen its exports of crude to its biggest market, the United States, climb since February this year.

In fact, between February and June, Venezuelan oil exports to the Gulf Coast refineries increased by an impressive 43%, according to US customs data cited by S&P Platts.

It seems that market logic is overriding other factors. The recovery in Venezuelan exports is confined to Gulf Coast refineries, analysts note. These are equipped to process heavier grades and their choice of supplier is limited.

Mexico’s oil production is stagnating at present, despite ambitious plans of the new administration to raise it from the current 1.9 million barrels per day to 2.5 million bpd.

Canada’s heavy crude production is growing, but pipeline capacity is not, so it’s difficult and costly to get more heavy crude to Gulf Coast refineries. Venezuelan heavy is a convenient alternative.

It is a convenient alternative despite earlier reports that Gulf Coast refiners have started turning back cargoes because the quality of the crude had fallen short of standard requirements. The US currently accounts for more than 45% of the troubled country’s oil production. It makes sense to take care of such a major market.