Prices of heavy sour crude oil grades in the US Gulf Coast have increased after a fire at a platform owned by Mexico’s state-owned Pemex cut its output by about 25% since Sunday. The blaze broke out at Pemex’s offshore platform in the southern Gulf of Mexico, killing at least five and injuring six. It also cut the company’s production by more than 400,000 bpd. Industry sources estimate returning output and exports to normal levels would take weeks.
As a result, USGC refiners, the largest recipient of Mexican oil, are seeking replacement grades, which caused prices to rise, traders said. Mars crude was trading at a $2.35 discount to benchmark futures on Tuesday, narrowing from the $2.65 discount on Monday, near the weakest levels in about a month. Western Canadian Select (WCS) in Alberta also began to rise following the news of Pemex’s supply hit, the traders added.
Refiners and traders are also bracing for cargo delivery delays and possible force majeure declaration from Pemex. The fire also threatened to cut gas supply to Mexico’s Ku-Maloob-Zaap fields which could further slash the country’s oil output, especially that of Maya grade, one of the main feedstocks of USGC refiners. Reuters reported that Pemex is drawing its crude inventories to fulfill export commitments.
