NEW YORK (Reuters) – Many U.S. oil refiners rely closely on imported crude as a result of their services are configured to run heavier grades, reminiscent of these coming in from Mexico and Canada.
Refiners are awaiting readability and making ready for U.S. President Donald Trump’s threatened tariffs on crude imports from Canada and Mexico.
Trump stated on Friday that he would decrease threatened tariffs on Canadian oil to 10% and that tariffs on oil and fuel are prone to take impact on Feb. 18.
A tariff on oil imports may drive up the price of crude, pushing refiners to chop the quantity of oil their services course of. Refineries within the Midwest course of about 70% of the 4 million barrels per day (bpd) of crude imported from Canada.
Phillips 66 stated there could possibly be manufacturing cuts within the U.S. Midwest and Rocky Mountain area the place different crude provides are restricted if tariffs take impact.
The refiner expects the 457,000 bpd of Mexican crude that comes into the U.S. could possibly be displaced and transfer to Europe or Asia.
“We might anticipate to see the heavy crudes agency a bit simply on the inefficiency of logistics,” stated Brian Mandell, government vice chairman of promoting and business at Phillips 66. “Because the 12 months goes on and OPEC places extra barrels again onto the market, we’d anticipate these differentials to widen again out.”
Phillips 66, together with HF Sinclair and Par Pacific Holdings, has elevated publicity to Canadian crude, knowledge from TD Cowen reveals.
“Our business and optimization groups have been working laborious to develop each attainable situation we will consider and the way we’d reply,” stated Gary Simmons, chief working officer of Valero Vitality, throughout a name with analysts on Thursday. “You may see at a ten% change in throughput. Loads is determined by how far it goes and the way deep you need to again off on a few of these heavy barrels.”
Valero is the second-largest U.S. refiner by capability.
HF Sinclair, Par Pacific and Marathon didn’t instantly reply to requests for remark.
Under is the most recent obtainable knowledge on the quantity of crude oil prime U.S. unbiased refiners imported from Canada and Mexico in November 2024.
Refiner Canada (hundreds of Mexico (hundreds of
barrels) barrels)
HF 5,060
Sinclair
Phillips 14,481 497
66
Par 1,356
Pacific
Marathon 15,535 1,488
Valero 1,147 6,599
Supply: Information from U.S. Vitality Info Administration
Observe: Information launched on Jan 31, 2025
(Reporting by Nicole Jao in New York; Modifying by Matthew Lewis)
