US Gulf Coast refiners have been increasing their imports of a crude oil residue from Russia in response to both sanctions on Venezuelan crude exports and declining prices of high sulfur fuel oil ahead of International Maritime Organization’s revamp of marine fuel sulfur regulations. The trend could be complicating plans to ramp up pressure on the Maduro regime with additional sanctions on Venezuelan crude flows, analysts said. At issue is US imports of residuum, which the US Energy Information Administration defines as a residue from crude oil after distilling off all but the heaviest components, with a boiling range greater than 1,000 degrees Fahrenheit.
“Residuum is the bottom of the bottom, the thickest of the thick,” said Mason Hamilton, a petroleum markets analyst with EIA, who has been tracking the increase in US imports of residuum.
For its import data, EIA groups residuum into the “unfinished oils” category. The US imported an average of 634,000 b/d of unfinished oils through the first 11 months of 2019, according to EIA, up from 611,000 in all of 2018. US imports of unfinished oils climbed as high as 762,000 b/d in October, the highest monthly average since September 2013, when the US imported 770,000 b/d of unfinished oils. Gulf Coast refiners imported over 192,000 b/d of residuum through the first 11 months of 2019, a 75% increase from 2018 and the highest annual average since 2013, when regional refiners imported 207,000 b/d of residuum, EIA data shows. Residuum imports by Gulf Coast refiners climbed as high as 316,000 b/d in August, according to the EIA.
According to Hamilton, the increase in residuum imports by Gulf Coast refiners is due to both sanctions imposed in January 2019 that prohibited crude and refined product flows between the US and Venezuela, and the lead up to the debut of the IMO regulations, as some refineries looked to counter sinking prices for high sulfur fuel oil. Many US refiners have been blending residuum with lighter crudes to compensate for declining imports of heavy crude from Iraq and the complete loss of heavy crude from Venezuela. In November, Gulf Coast refiners imported about 1.35 million b/d of heavy crude, compared with 1.96 million b/d in November 2018 and 2.09 million b/d in November