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Easing of Venezuela Sanctions Boosts US Refiners: BNEF


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

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