Recent LOOP Sour rally evidence of persistent, global sour shortage: In the LOOP

The Louisiana Offshore Oil Port received no imports of Saudi Arabian or Iraqi crudes by the halfway point of July, evidence of the global sour crude shortage and competition for those barrels that has led to rising prices for regional grades such as LOOP Sour, which has increased in value by 60 cents/b over the past month alone, an analysis of Platts Analytics and S&P Global Platts data shows.

Serving the Louisiana refining industry, LOOP is the only US deepwater port capable of receiving VLCC or larger tankers and typically ranks No. 3 for US ports that receive the most crude by water, behind Houston and Port Arthur, Texas. It is a bellwether for the regional crude supply-demand picture.

By the halfway point of July though, LOOP had received no waterborne imports of crude from Iraq and Saudi Arabia. Compare that to January-June, when LOOP received an average of 5.9 million barrels per month of Iraqi crude and 6.5 million barrels of Saudi crude, according to a Platts analysis of US Customs data through July 13, the most-recent available.

The global fight for medium sour barrels has picked up as OPEC and non-OPEC countries look for a way to bring up crude prices by limiting production. That global sour shortage has naturally resulted in higher prices in the US Gulf Coast region.

On Monday, LOOP Sour, a blend of two domestic grades and three imported Middle East grades, was heard bid-ask at minus 35 cents/b by minus 30 cents/b to one of its five component crudes, Mars. It was assessed on the low end of that range, or cash West Texas Intermediate at Cushing, Oklahoma, minus $1.15/b. (After Monday's market close, it was said to have traded at Mars minus 30 cents/b.)

Platts LOOP Sour has risen 60 cents/b from mid-June compared with a 45 cents/b increase in Mars differentials and a 60 cents/b increase in Poseidon, according to Platts data.

Looking ahead, as the usual exporters to the US become more selective, US Gulf of Mexico refiners will likely find crude streams new or rare to the region and rely more on regional production.

However, that, too, will bring challenges, as interest for North American crudes continues to increase. In the past week, two Indian refiners have announced deals to purchase a total of 2.6 million barrels Mars, Poseidon and Western Canadian Select.

Platts fixture reports show through mid-July at least at least six tankers with a combined 660,000 mt of capacity have been fixed leaving the US Gulf Coast. GS Caltex, Valero, BP, Trafigura and Shell were those said to be exporting out of the US Gulf of Mexico to destinations as varied as the UK, US West Coast, Caribbean and Asia.

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.