OIL PRODUCTS: US Independent Refiners Face Tariff Headwinds, May Reduce Runs

US independent refiners face headwinds from upcoming tariffs, which are expected to see feedstock costs rise, potentially resulting in reduced runs, Argus reports. 

• The US may impose a 10% tariff on energy from Canada, and a 25% tariff on all imports from Mexico on March 4 – though there is still uncertainty over the actual levies that could be applied.
• FPF Energy says tariffs on Canadian crude would cause US midcontinent refiners to cut throughputs, even if they can find alternative crudes.
• Marathon Petroleum, the largest US refiner by volume, says it could pivot some midcontinent refineries to run domestic crude slates. CEO expects tariff price increases would ultimately be borne by the producers.
• HF Sinclair says it could switch to alternative lighter crudes at its refineries if tariffs are implemented.
• TD Cowen expects US refiners that run Canadian crude on the margin to switch to light sweet crude, increasing WTI and Brent prices. Expects that inland refiners that run Canadian crude as a core part of their slate are likely to continue to do so.
• TD Cowen says US Gulf refiners will be likely to replace Mexican and Canadian heavy crude with other heavy sour producers such as Iraq.