In the LOOP: Imports of Kuwaiti crude fall 60.5% year on year

Imports of Kuwaiti crude into the Louisiana Offshore Oil Port have fallen by 60.5% year on year as of September, with rising Iraqi crude imports failing to make up the full loss.

For the first nine months of 2018, only 8.347 million barrels of Kuwaiti crude were imported into Morgan City, Louisiana, the delivery point for LOOP, according to data from S&P Global Platts Analytics and US Customs data. This marks a steep fall from a total volume of 21.128 million barrels for the same time period in 2017.

In September, Kuwaiti crude imports into LOOP fell to zero, with July and April also failing to see any similar imports into Morgan City. By comparison, September 2017 saw about 994,000 barrels of Kuwaiti crude brought into the port for domestic consumption.

As imports of Kuwaiti crude have dropped, volumes of Iraqi crude, including Basrah Light, have increased by about 26% year on year. For the first nine months of 2018, Morgan City saw 50.67 million barrels of Iraqi crude imported, compared with only 40.09 million barrels for the comparable time period in 2017.

The impending shortage of Iranian crude barrels in the market due to the looming implementation of US sanctions has led to an increase in demand from Asian buyers for comparable barrels, according to market sources. As a result, more Kuwaiti barrels have been diverted away from the US Gulf Coast and toward markets in Asia.

A wider swap spread between second-month Dubai futures and front-month WTI futures has also served to push higher volumes of domestic medium sour grades such as Mars that way. With US crude exports remaining strong in recent months, domestic supply is becoming somewhat tight, according to an industry source.

As the arbitrage east has opened up, the assessed value of medium sour domestic grade Mars has rebounded from a 21-month low of WTI cash minus $2.90/b on July 23 to $5.40/b Friday, with domestic buyers forced to pay higher prices to prevent foreign buyers from securing increasingly larger volumes.

Kuwait Export Crude, along with Basrah Light and Arab Medium, are delivered into LOOP's Segregation 17 crude blend. Segregation 17 is blended with Mars and Poseidon to form the LOOP Sour crude stream. LOOP Sour has averaged 29.5-30.5 degrees API gravity and 2.11%-2.9% sulfur content over the past 12 months, making it most similar to Mars in terms of API gravity and Arab Medium in terms of sulfur content.