It has been a difficult day for oil refiners in the Gulf of Mexico of the United States, beaten by Pres. Trump's threats to impose a tariff on all goods from Mexico and the widely expected movement of the EPA to allow the sale of E15 gasoline throughout the year.
A new tariff could interrupt the long-term cross-border energy trade: Mexico sends 600K-700K bbl / day of oil to the United States, mainly to refineries that process crude oil in gasoline, diesel and other products, while Mexico buys more than 1 million. bbl / day of crude and fuel from the United States, more than any other country.
A sharp decline in the supply of Mexican oil could raise fuel costs if US refineries were forced to buy heavier crude grades from other distances, which would increase shipping costs; Refineries have been using Mexico's heavy crude grades in part to compensate for the loss of barrels from Venezuela, which has been under United States sanctions.
"For refineries in the Gulf Coast that have already been affected by Venezuela's sanctions, Iran's sanctions, cuts in Canada and OPEC cuts, this is an insult to injury," says Sandy Fielden of Morningstar. "The number of alternative sources of heavy crude is decreasing."
The worst blow among the refiners would be Royal Dutch Shell & # 39; s (RDS.A -0.5%) Deer Park plant in Texas; Shell is the largest importer of Mexican crude, with 148K bbl / day in February.
Valero Energy (VLO -3.8%) and Chevron (CVX -0.7%) are the next largest buyers, with a combination of more than 200K bbl / day.
Cowen badysts say that the impact of tariffs on refineries would begin to appear in the third quarter earnings; the firm says PBF Energy (PBF -5.6%) and VLO are more exposed to impacts, while Phillips 66 (PSX) -1.7%) and Marathon Petroleum & # 39; s (MPC -2.9%) Exposure is less pronounced due to its more diversified nature.
Also: HFC -4.1%, DK -4.2%, CVI -2.8%CLMT -4.2%, XOM -1.2%.
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