Russian Urals crude was recently imported into the US East Coast for the first time since 2013, according to US Customs data.
More shipments of the medium-to-light sour grade may be making the rare trip across the Atlantic as lower differentials, coupled with affordable freight rates, opened the opportunity, according to market sources.
Two Urals cargoes aboard the same vessel were unloaded along the US East Coast within the past two weeks. The first, a 580,000-barrel shipment, arrived on the Elias Tsakos in Wilmington, Delaware, on April 30. Another 140,000 barrel shipment, also on the Elias Tsakos, arrived in Philadelphia on May 6.
The cargoes were shipped by Statoil from storage in the Bahamas.
The likely buyer was PBF Energy, which owns refineries equipped with cokers in Delaware City, Delaware and Paulsboro, New Jersey. The company could not be reached for comment.
One East Coast crude trader said Wednesday that another one or two cargoes of Urals is expected to arrive in Point Tupper, Nova Scotia, which is home to crude storage terminals.
The wave of Urals in to the Atlantic Coast region was made possible by lower values in March. The Mediterranean Urals market hit its lowest differential in six months on March 20, when S&P Global Platts assessed it at a $2.05/b discount to the Mediterranean Dated Strip, their lowest level since September 23, when they were at a discount of $2.10/b. Lagging demand from Asian buyers, meant values for the crude sank.
Canadian refiners, as well as US Atlantic Coast refiners have taken Urals crude in the past.
PBF typically shows the most diverse import slate among US Atlantic Coast refiners, suggesting the refiner favors optionality. US Energy Information Administration monthly data shows imports from Iraq, Mexico and Venezuela had fallen through February, while imports from Saudi Arabia have risen.
Platts does not track USAC coking margins for Urals, but Turner, Mason & Co yield formulas shows that running Urals through a Gulf Coast coker produces a better-than-average diesel yield. Turner, Mason yield formulas are applied to Platts product prices to create coking and cracking margins globally. Coking margins for Urals on the Gulf Coast averaged more than $9/b in April, on par with Saudi Arab Medium.
Source: Platts