WTI Crude

Loading...

Brent Crude

Loading...

Natural Gas

Loading...

Gasoline

Loading...

Heating Oil

Loading...

Rotate device for more commodity prices

Just How Big Is The Oil Market?

Just How Big Is The Oil Market?

Oil is utilized in nearly…

The Chinese Giant Taking Over Energy Markets

The Chinese Giant Taking Over Energy Markets

This Chinese conglomerate aims to…

Latin America Looks Toward Oil Cargo Sitting Offshore Venezuela

Tanker

Latin American countries that import U.S. fuel cargoes, mostly from the Gulf Coast, are scrambling to find alternatives to U.S. shipments after Hurricane Harvey battered Texas and Louisiana, leading to massive flooding at refineries, and disruptions at port operations.

Regular Latin American buyers of U.S. fuel such as Mexico, Brazil, and Colombia are now eyeing a fleet of two dozen tankers loaded with some 7 million barrels of fuel that have been sitting off the Venezuelan coast for weeks, Reuters reports, citing trading and shipping sources. The cargoes have been unable to unload either because Venezuela’s close-to-default state oil firm PDVSA has delayed payments, or because the tankers are waiting to reach bottlenecked ports, according to Reuters’s sources.

After Harvey hit the U.S., a trading firm told PDVSA on Tuesday that it was planning to suspend the delivery contract for two cargoes of diesel and divert them to Ecuador, a PDVSA source told Reuters.

Another source at an oil company with operations in Latin America told Reuters that if trading firms were to “offer to divert a cargo from Venezuela, they [Mexico] are going to take it.”

Venezuela is also one of the top Latin American buyers of U.S. fuel, because operational setbacks and huge financial problems, as well as years of underinvestment in refineries, has led to PDVSA having to source oil products on the international market, while its refineries have been operating at less than 50 percent capacity. Early last month, reports suggested that six tankers carrying oil products had been docked for between a month and a week at Venezuela’s largest refining complex, Paraguana Refining Center (CRP), waiting for PDVSA to pay before they discharge.

Related: Failed Oil Price Recovery Slams Energy Stocks

Although PDVSA has failed to pay in advance for most of the cargoes sitting off Venezuela’s coast, diverting shipments to other destinations would mean a breach of contract and strained relations, so any diverted cargoes would likely be compensated by swapping the shipments for delivery later this month and in October, trading sources tell Reuters.  

Diverting fuel shipments from Venezuela to other, paying customers in Latin America could be a very profitable move for traders, because due to Harvey, more than 20 percent of the U.S. refinery capacity is shut, leading to gasoline and diesel price spikes. Earlier this week, gasoline futures hit a 25-month high on Wednesday, while early on Thursday, the September gasoline futures contract that expired yesterday jumped to above US$2 per gallon, a 6.6-percent surge from Wednesday’s close and more than 20 percent from the previous week.

By Tsvetana Paraskova For Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News