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OIL
The loosening of sanctions on Venezuela’s oil industry will be a boost to US refiners, well-equipped to process its heavy crude, according to Bloomberg.
- Venezuelan crude is heavy and is typically more expensive to refined and trades at a discount to lighter grades.
- US refiners with high Nelson Company Indexes – more sophisticated and complex refineries with additional conversion units – can buy discounted barrels and extract higher value products from heavier crudes.
- The key players likely to benefit are Marathon Petroleum, Valero, and PBF Energy.
- The shorter shipping distance and reduced logistics also gives US refiners an advantage when taking Venezuelan crudes.
- The crude will also trade at market value, benefitting the US as current customers for Venezuelan oil such as China are receiving barrels at steep additional discounts due to sanctions.
- The main drawback is Venezuela’s struggling infrastructure, which is likely to cap the increase in supply to around 0.2m b/d.
Source: Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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