Trading houses are rushing to supply Russian Urals crude to the United States where oil production was hammered by Hurricane Ida in August, three trading sources said on Friday.
Ida, one of the most devastating hurricanes for oil companies operating in the U.S. Gulf of Mexico since storms in 2005, led to prolonged halts in the area’s offshore oil output. About three-quarters of production remains shut.
Trading firms, including Trafigura, Vitol and Litasco, have secured about 5 million barrels of Russian Urals for loading in September and for delivery to the United States, the three sources told Reuters.
Urals oil arbitrage to the United States is rare. Usually only a few cargoes are shipped every few months.
“Urals is a good grade to fill supply gaps,” one trading firm source said, adding that it was available in the spot market and was the right quality for many U.S. refiners.
All the sources declined to be named, as trading firms typically do not comment publicly on their trading operations.
Two of the sources said they expected more Urals cargo fixtures to be secured for delivery to the United States in coming days as supply shortages hit U.S. refiners.
Urals oil differentials jumped to a seven-month high this week amid high demand for barrels to load in September. ,
The hurricane hit output of sour U.S. grades, such as Mars, most heavily. Urals, which is also a sour grade, has provided a replacement for U.S. refiners.
Royal Dutch Shell Plc cancelled some U.S. export cargoes of Mars grade crude due to damage to offshore facilities from Hurricane Ida, signalling energy losses would continue for weeks.
The other source said Europe, China and other areas that usually import U.S. oil were also seeking more Urals crude.