US refiners are turning to Canadian and Iraqi crude oil to replace US Gulf of Mexico grades lost due to storms. Royal Dutch Shell, the biggest producer in the Gulf, said storm damages would likely limit its Mars crude production until 2022. Mars is a sour crude grade mostly used by refiners in the US Gulf Coast, South Korea, and China. Traders estimated around 250,000 bpd of the US Gulf of Mexico’s oil production is lost due to the storms.
Traders said US refiners are ramping up purchases of Iraqi Basra crude and Canadian heavy oil to replace those lost barrels. Basra has been these refiners’ top choice when US sanctions cut off supplies of Venezuelan heavy oil. One of the traders said Marathon Petroleum bought Basrah for loading in October. Meanwhile, Asian refiners are turning to Russia’s Urals. Trading sources said Unipec recently purchased 200,000 tons of Urals crude for October delivery.
