Second VLCC export cargo heads to China: In the LOOP

The second direct-to-VLCC export of US crude from the Louisiana Offshore Oil Port is en route to the port of Shanghai, China, according to S&P Global Platts trade-flow software cFlow.

The vessel Nave Photon departed LOOP on March 25, after having arrived at the offshore US Gulf of Mexico port March 15, cFlow showed.

The vessel is believed to be laden with US Gulf Coast medium sour crude grade Mars and chartered by Shell, according to market sources. Following its departure from LOOP, the vessel has made its way past the Caribbean islands just northeast of Venezuela, according to data from cFlow.

In recent months, buyers in China have been looking to increase their exposure to WTI-based crude grades in an attempt to diversify supply, according to a market source. An open arbitrage window for USGC crudes to go east has added to the attractiveness of buying USGC crude grades for buyers in China.

The Dubai/WTI swap spread has widened $1.41/b since the start of March and 7 cents/b since the start of February to 96 cents/b as of Monday. As Dubai's premium over WTI grows, WTI-based sour grades become more competitive with Dubai-based Middle Eastern sour grades in export markets in Asia.

Mars has been steadily gaining in price since February 13, having added $1.80/b since to end at a differential of WTI cash plus 15 cents/b on Monday.

Despite the grade's strengthening differential to WTI cash, Mars remains competitive with Basrah Light, Qatar Marine, Oman and Dubai grades delivered to Asia.

The delivered price of LOOP Sour crude to North Asia was assessed at $67/b Monday in Singapore, using the assessed value of LOOP Sour crude on Thursday. With LOOP Sour currently at a 60 cent/b discount to Mars, this puts the delivered price of Mars to North Asia at $67.60/b. When compared with the outright values for Dubai and Oman crude, the delivered price of Mars into North Asia is more competitive. The delivered price of Dubai cargoes was assessed at $67.90/b and the price for Oman cargoes reached $67.89/b Monday at the Singapore close.

In comparison with Basrah Light and Qatar Marine crudes, Mars is relatively competitive coming in at a slight premium. The delivered prices into North Asia for Basrah Light and Qatar Marine crude were assessed at $67.49/b and $67.52/b, respectively, on Monday at the Singapore close.

The 'In the LOOP' Americas crude oil wrap runs each Monday in Crude Oil Marketwire, North American Crude and Products Scan and on the Platts Global Alert. You can read the FAQ: USGC LOOP Sour crude here and find the full special report LOOP Sour Crude: A benchmark for the future here. Also be sure to download our LOOP app(opens in a new tab) by searching for 'Platts LOOP' in your app store.