September Basrah Light imports at LOOP rebound from August hiatus: In the LOOP

The Louisiana Offshore Oil Port has received a flurry of Iraqi crude imports in the past few weeks, with more expected, which could be behind a recent 30% jump in open interest on the CME's LOOP Sour futures contract.

In the initial two weeks of September, LOOP has received 2.135 million barrels of Iraqi Basrah Light in three imports, according to Platts Analytics and the latest US Customs data available. Marathon was the consignee for 550,000 barrels of 28.4 API Basrah Light, which arrived September 5 on the tanker Dilong Spirit. Valero imported a further 584,000 barrels of 29.3 API Basrah Light on September 6 on the Ilma and 1.001 million barrels of 28.8 API Basrah Light on September 7 via the tanker Solana.

Platts vessel-tracking software cFlow shows another two VLCCs laden with Iraqi crude are expected to arrive at LOOP in the next month. The New Achievement is expected to arrive October 8 while the Leo Voyager will arrive October 19, both having sailed from Al Basrah, Iraq.

This represents a sudden rebound in Iraqi crude arriving at LOOP. LOOP receipts of Basrah Light averaged 4.5 million b/month in January-June; however, July's roughly 3.07 million barrels was the lowest amount since February, while none was imported in August, data shows.

Just shy of September's midpoint, LOOP has received 70% of July's total imports and 54% of June's total.

If the barrels are not stored in leased tanks, they could find a home in one of two caverns. LOOP allocates storage of Basrah Light to a cavern called Segregation 17 — comprised of Basrah Light, Arab Medium and Kuwait Export Crude — and a second cavern for the blend LOOP Sour. LOOP Sour is a blend of US Gulf of Mexico grades Mars and Poseidon, and the blend of Middle East crudes Segregation 17.

The latter appears to be a likely home for at least some of the barrels, given a recent spike in open interest on a LOOP Sour futures contract. On Friday, an unknown entity bought 500 lots of November LOOP Gulf Coast Sour Crude Oil Futures at $50.95/b, with no apparent associated leg of NYMEX Light Sweet Crude Futures or Mars futures, against which LOOP Sour often is priced. That brings total open interest in the CME-hosted contract to 2.22 million barrels when combined with another 1.72 million barrels of OI in the January 2018 contract.

Matrix Markets hosts on behalf of LOOP a monthly auction in which companies bid for the right to store LOOP Sour crude. Recent Matrix Markets data shows about 1.2 million barrels of cavern space out of a total of 7.2 million barrels remains unsold for November.

The recent increase in Basrah Light imports is also notable because Iraq's State Oil Marketing Organization has kept its official selling price for US-bound Basrah Light high relative to recent history. The OSP for US-bound Basrah Light has for August-October been a 35 cents/b premium to the Argus Sour Crude Index compared with an average differential of minus 32 cents/b from 2014-2016, Platts data shows.

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.