Reports of cuts to crude exports from Mexico could provide a boost to VLCC rates at the expense of their smaller sister ships.
State energy company Pemex has asked its trading unit to cancel up to 436,000 barrels per day of shipments in April, according to an internal document seen by Reuters.
The country needs oil to feed the new Dos Bocas refinery with a capacity of 340,000 bpd.
This will be ramping up production by the end of the third quarter.
“They either refine it or export it. There is not enough crude for both,” a source told Reuters.
The cancellations will reduce exports of Mexico’s flagship Maya crude by 122,000 bpd, Isthmus by 247,000 bpd and Olmeca by 67,000 bpd, the document showed.
Bloomberg said some term contracts will be cancelled to the US, Europe and Asia.
Mexico plans to reduce its dependency on oil product imports with the new plant.
Crude oil exports from Mexico were already down 16% in the first three months of this year, compared with the fourth quarter of last year.
Mexico usually ships out 600,000 bpd of Maya crude, mainly to US Gulf refineries.
Shipbroker BRS Group said even a partial cut is expected to have a negative impact on aframaxes out of the US Gulf coast.
Middle East oil sought after
More crude from Shell and BP’s Mars crude platform in the Gulf of Mexico could be held for domestic refining in the region as a result of the Mexican cuts, easing VLCC demand for exports, the broker believes.
But there could also be a “potential scrambling” for Middle East crude supplies into the US Gulf and China, which could drive rates from the Middle East to outperform, BRS added.
Clarksons Securities assessed an eco VLCC at $52,600 per day on average on Wednesday, up 11% over the last month.
The Baltic Exchange quoted Middle East to China runs at $42,900 per day on Tuesday, up 17% from the beginning of March.
BRS had previously forecast the US would keep product shipments to Europe at elevated levels while sending less to South America as a result.
This has materialised in the first quarter, with exports into Europe up 36% from the last quarter of 2023, the broker said.
However, shipments into Mexico were down 14%.
