"I suspect it will keep to zero. It's a big problem for US refineries," says Ryan Fitzmaurice, energy strategist at Rabobank. "We really need the heavy raw material coming from Venezuela. We find it difficult to source it from elsewhere. "
Add to the misery of Venezuela
While sanctions were imposed in January, Fitzmaurice said that some shipments from Venezuela continued to arrive in recent weeks due to the mildness of US officials and the fact that the raw material was already on ships off the Gulf Coast.
Prior to the sanctions, the United States was Venezuela's No. 1 oil customer, and the Venezuelan government used oil exports for 90% of its turnover. 19659009] Years of under-investment from the country has led to Venezuela's oil production falling sharply, but that situation has been exacerbated by the recent chaos and a Merican sanctions.
"Venezuela has long been a problem for the oil market," said Michael Tran, director of global energy strategy at RBC Capital Markets.
Saudi shipments down 37%
The suspension of oil shipments from Venezuela contributes to the upward pressure on US oil prices have increased 40% since Christmas Eve and petrol prices are crawling higher.
Saudi Arabia, the king of OPEC, has sharply cut oil products to the US The goal is to convince oilmakers and analysts that it really is to melt back on production And the United States has the most timely and accurate inventory data.
US oil imports from Saudi Arabia have fallen by 37% over the past year to 407,000 barrels per day, according to the EIA. And they are down by 68% from two years ago.
"The Saudis are specifically aimed at the United States," said Fitzmaurice.
Canada, Mexico has its own problems
The bad news is that US refineries cannot rely on American shale oil alone. That's because not every barrel is raw equal. While US shale oil is a high quality light quality, the decade-old Gulf Coast refinery is set to run on a healthy dose of lower quality heavy crude oil, as is abundant in Venezuela.
"When it comes to real heavy stuff, we really don't," said Fitzmaurice.
Normally, the United States could turn to Canada for heavy crude oil. But Canada has run out of pipelines used to transport raw to its southern neighbor, limiting production.
"Canada is maxed out," said RBCs Tran.
Mexico also produces heavy crude oil. But Mexico's oil production has been in steady decline for many years.
The situation has caused a strange phenomenon, where heavy crude oil is traded in pairs or even at a premium to light crude oil.
"Why would you pay more for something that is lower quality? Because it gets harder and harder to find the heavy crucibles," Tran said.