US Gulf Coast claims strategic trading hub title

The US Gulf Coast has inadvertently become a strategic trading hub for global oil flows in the rapidly evolving oil market marked by North American short cycle shale production. The region is blessed with access to premium upstream acreage linked by a strong network of infrastructure and ports which have been converted from import to import/export terminals following the lifting of the crude export ban two years ago.

Source: EIA

The PADD 3 region also houses close to 60 refiners with c.10 mbopd of complex refining capacity which can cater to a wide range of product slate demands. This has been increasing important as refining centres in Latin and South Americas have become challenged in recent years with the collapse in oil price leaving them financially imperilled. Mexican refineries are currently running at a utilisation rate of below 50% and Venezuela is on the verge of collapse.

The US has stepped up as the de-facto refiner – importing a range of blends from across the world and exporting refined products globally. Crude oil once destined for Europe for refining has also been making its way to the US with the closure of troubled refineries in Europe which started long before the recent oil price crash.

Over the last decade, the US has gone from a net refined products importer to the largest exported in the world. In this time period, the world has become more reliant on the US as the US itself has become more energy independent. At the moment, over half of refined product exports are destined for Latin America, displacing the lost refining capacity there. Asia is also a growing market for US crude and refined products with the Gulf Coast having easy access to Asia through the Panama Canal.