Puerto Rico has all but stopped importing refined products from Russia and the Baltics since Russia's invasion of Ukraine, slowing what had been a strong import flow to start 2022.
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The US territory's total oil products pull dropped off sharply in March after a brisk pace in the first two months, ending the quarter with 12.13 million barrels of product imports, according to an analysis of the latest US Customs data. Puerto Rico imported 5.12 million barrels in January and 4.8 million in February before tapering off to 2.22 million barrels in March.
Only three cargoes totaling 592,000 barrels of jet fuel, fuel oil and premium gasoline unloaded in the first nine days of April, all from atypical sources of the Caribbean and Africa.
"A lot of the barrels to PR came from the Mediterranean or Europe," a Latin American market source said April 13. "Given Russia sanctions and its impact on European balances, the barrels have to come from somewhere else."
Puerto Rico brought in 946,000 barrels, or roughly three cargoes worth, from Lithuania in January and February but none in March. In the first quarter of 2021, it imported 2.5 million cargoes from Lithuania.
Puerto Rico brought in 1.31 million barrels from Estonia in the first quarter, but only one in March for 282,000 barrels. Trafigura was the shipper and Shell the consignee for the gasoline unloaded March 29 from the vessel San Jack, US Customs data showed. Puerto Rico has imported between 1.33 million and 2.2 millions from Estonia in the first quarter each year from 2016 through 2021.
Puerto Rico brought in no cargoes from Latvia and one cargo of jet fuel from Russia in January for 310,000 barrels, similar in time and volume to only one cargo from 2021 in the first quarter.
Effect of Jones Act
Puerto Rico rarely pulls from the US because of expensive shipping requirements for Jones Act ships. But Russian refined products outside of naphtha and dirtier products like fuel oil have sharply tapered off elsewhere in the US since Russia's invasion of Ukraine near the end of February. Customs data showed only one diesel import, a Long Range 1 cargo carrying 490,000 barrels, into New York March 11 for Gunvor. There were no significant Baltic cargoes except for a March 29 cargo of 327,000 barrels of gasoline dropped off in Port Canaveral, Florida, by Vitol.
The Virgin Islands was the main origin point for Puerto Rico's imports, with 3 million barrels of mostly fuel oil in the first quarter, followed by the Netherlands with 2.73 million barrels of mostly gasoline. Portugal, Finland, Denmark, Togo, Colombia and Spain sent one to three cargoes each, while South Korea and Kuwait each sent 120,000 barrels, a first for both to Puerto Rico.
"Given current global tightness, the market is slowly moving toward a new balance," the source said. "But it takes time."
Puerto Rico took in 52% of its gasoline imports from the Baltics for 2016-2021. While Baltic nations are not directly sanctioned like Russia by the US, the Baltic nations are nonetheless affected. Their gasoline exports have been limited as Russia retains more gasoline to supply its domestic market and production dropped at natural gas-powered refineries in the region because of high natural gas prices.
Gasoline and blendstocks
Gasoline and gasoline blendstocks made up the largest selection of Puerto Rico imports, with 6.33 million barrels, the highest first quarter level since 2018. Puerto Rico imported 2.6 million gasoline barrels each in January and February and only 1.11 million in March.
Only 1.24 million barrels of diesel was imported, and only 121,000 barrels in March when ULSD hit record high prices globally. Puerto Rico's quarterly imports of diesel have dropped from 4.6 million in 2020 to 1.94 million in 2021. The island's power plants are diesel- and fuel oil-powered, however, and sources said a major plant fire in early April may reduce the need for those imports. About 1.64 million barrels of fuel oil and marine gasoil was imported in Q1, about par with the five-year average.
Still, refined product imports have recovered to 2017 levels, despite Puerto Rico having 10% less population. After Category 5 hurricanes in September 2017 and a pandemic adding to economic woes, Puerto Rico's already-slipping population dropped from 3.12 million in 2017 to 2.74 million at the start of 2022, according to UN data.
But gasoline use has now returned to normal. S&P Global Commodity Insights' trade-flow analytics software cFlow showed two more typical MR-sized vessels capable of carrying 300,000 barrels on their way to Puerto Rico. The vessel Imperial out of eastern Canada is part laden with an unknown cargo and an ETA of April 14. The other ship is the Alpine Mathilde, with an ETA of April 18, carrying gasoline. It was loaded in Tallinn, Estonia.