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Venezuelan Crude Gains Strategic Role for US Gulf Coast Refineries, Kpler Says

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Venezuelan crude imports into the US are on track to reach their highest level since 2017, helping Gulf Coast refiners offset supply disruptions linked to the Strait of Hormuz closure, Kpler said Wednesday.

The disruption in the Strait of Hormuz cut off a key source of crude oil and heavy residual feedstocks used by US Gulf Coast refineries to maximize diesel production, prompting refiners to seek alternative supplies, according to Kpler.

US purchases of Venezuelan crude have surged in recent months. Venezuela became the second-largest crude supplier to the US in May, surpassing Saudi Arabia and Mexico and trailing only Canada, Kpler said.

Venezuelan crude accounted for 10% of total US crude imports in May, up from 2% a year earlier. Canadian supplies also expanded, rising to 65% of imports from 59% over the same period, according to Kpler, citing Energy Information Administration data.

The shift reflects both the April closure of the Strait of Hormuz and declining shipments from Saudi Arabia and Mexico, while refiners continue to boost diesel and jet fuel output amid low domestic inventories.

US refiners increased operating rates to more than 95% in early June after spring maintenance work ended, and Kpler expects strong refinery activity to continue throughout the summer driving season.

Many Gulf Coast refineries rely on coker units that convert heavy residual material into higher-value products such as diesel and jet fuel. To operate efficiently, those facilities require either imported heavy fuel oil or crude grades that generate large volumes of residual feedstock.

Venezuelan crude continues to offer US refiners a reliable and competitively priced feedstock source, allowing them to take advantage of favorable economics for producing diesel and other fuels, Kpler added.

Even if the Strait of Hormuz reopens, supply constraints in the Middle East could limit exports to the US for months. With fuel inventories remaining low and refinery activity expected to stay strong, Venezuelan crude is likely to remain an important source of supply for Gulf Coast refiners, according to Kpler.

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