US crude oil imports from Mexico surged to the highest level in more than eight years last week as swelling inventories and a fire at the Latin American country's largest refinery in late June led it to offload more barrels.
US buyers boosted their purchases by 834,000 barrels per day (bpd) to about 1.3 million bpd in the week to July 3, the highest since February 2012, according to the Energy Information Administration. The surge helped send US net imports last week to the highest since August 2019.
US Gulf Coast refiners including Lyondell Basell Industries' Houston refinery, Valero Energy Corp , Shell and Marathon Petroleum Corp were among the buyers in recent weeks, according to market sources and Refinitiv Eikon data.
The crude was delivered to 10 different terminals, according to vessel-tracking firm ClipperData, with more than half the volumes going to Shell's Deer Park and Valero's Port Arthur refineries.
Lyondell Basell and Shell declined to comment. Valero and Marathon Petroleum did not immediately respond to requests for comment.
Mexico had an outage at the Salina Cruz refinery in late June after tremors from an earthquake caused a fire that led to the brief shuttering of the installation.
The country has resisted deep output cuts in the wake of a plunge in global oil demand due to the coronavirus pandemic. Mexico agreed at OPEC+ meetings earlier this year to cut 100,000 barrels per day of the 1.75 million bpd it pumps for a two-month period, far less than the 25% reduction from other members.
"Without the production cuts, they have extra to sell. Remember, they only cut 100,000 bpd for May and June. Now they can make as much as they want," one trader who purchases crude from Mexico said.
Demand to book Aframax tankers from the East Coast of Mexico to the US Gulf remains busy, shipbrokers said, with companies including commodities merchant Vitol looking to book cargoes loading in mid-July.
Houston Refining, CNR and Marathon have provisionally chartered Aframax vessels this week to load Mexican crude next week, data showed. Freight rates for Aframax vessels are lower, helping to open up the arbitrage, one shipbroker said.
