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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 374.35+0.7%Nov 18 4:00 PM EST
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To: TobagoJack who wrote (148712)5/23/2019 1:27:10 AM
From: Elroy Jetson2 Recommendations

Recommended By
dvdw©
elmatador

   of 217866
 
Heavy sour crude oil typically sells for a greater than $30 a barrel discount to light-sweet crude produced by US operations.

There are refineries in the US Gulf, like Chevron's refinery in Pacagoula Mississippi which were designed to run on the deeply discounted sour heavy crude oil from Venezuela.
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As production in Venezuela dropped-off it was increasingly replaced with heavy sour oil blends, including Canadian tar sands, Middle Eastern blends, Iranian exports and the Russian Urals Blend which is supplied through the Baku-Novorossiysk pipeline system and the Druzhba pipeline. With the formal embargo on Venezuela and Iran, these alternate sources completely replaced Venezuelan and Iranian crude.

Urals-blend trades on the "Russian Trading System" and is also a benchmark set-up to trade on the NYMEX under the ticker REBCO, but no contracts have ever traded there. Dubai too has a benchmark for their heavy-sour crude, which has also never traded in US markets, except as actual oil purchases.
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But the demand for high sulfur products dims considerably six months from now in January 2020 when global sulfur standards for ship bunker fuel decline from 3.5% to 0.5%.

Many heavy-sour refineries in China and other locations will need to be rebuilt to produce the low-sulfur products US Gulf heavy-sour refineries are capable of producing - or they will alternately need to switch to running lighter and sweeter crude oils from the US and other producers.
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