Fuel oil imports into the U.S. Gulf Coast surged in September to the highest level in a quarter century, reflecting the impact of sanctions constraining Venezuelan and Russian crude exports and forcing refiners to improvise with alternative feedstocks.
Ship-tracking data from Kpler cited by Reuters show the Gulf Coast imported about 541,000 barrels per day of fuel oil last month, the strongest inflow since 2000. Refiners configured for heavy sour crudes are increasingly relying on residual fuel oil to keep coking units supplied.
At the same time, crude imports into the Gulf fell to roughly 880,000 barrels per day, the lowest since late 2022. Domestic fuel oil inventories have tightened as well, dropping to just over 20.6 million barrels, levels well below pre-Ukraine war norms.
The shortfall is being met by Middle Eastern producers, with Saudi Arabia, Kuwait, and Iraq redirecting cargoes to the U.S. freed up by a seasonal decline in their own power-burn demand. Reuters cited traders pointing to a notable increase in spot availability from the region, with some volumes also moving from Asia and North Africa.
On Thursday, Hoa Nguyen of Sparta Commodities told Reuters that “there is way more availability of high-sulfur residuals right now, which the U.S. refining system is hungry for and which will help boost the diesel yield.” Another Gulf Coast refining source told Reuters that the trend is “driven by declining supplies of heavy crude, particularly from U.S.-sanctioned Venezuela”.
The increase in imports comes as global fuel oil demand itself is rising, supported by longer tanker voyages around the Red Sea and a growing “shadow fleet” moving sanctioned barrels. These factors are feeding into the Gulf Coast shift, creating tighter links between global shipping markets and U.S. refinery operations.
By Charles Kennedy for Oilprice.com
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