ES #136: U.S. Refiners Shift to Lighter Slates, Import Sources Consolidate

Energy Shots #136

The shale revolution powered a surge in U.S. petroleum liquids output to make the U.S. the world’s largest crude producer in mid-2018, yet the strategic value of U.S. production has been muted by infrastructure built to meet over 70 years of world-leading domestic consumption—Namely, the U.S. refinery fleet’s tooling for heavy sour slates.

However, the latest data from the Department of Energy shows several notable trends since the U.S. became the world’s largest crude producer, including 1) strengthening reliance on Canadian and LATAM crude that has displaced Middle Eastern barrels and 2) a steady transition to refining lighter, sweeter grades.

Crude Imports: Grades & Sources

Trailing 12M average U.S. crude imports through Feb 2025 were approximately 30% below the 2009 average.

• A closer look at imports by grade shows U.S. imports of heavy sour crude saw the only increase (+5%, +188 kb/d) from 2009 levels versus -35% (-157 kb/d) for light sweet, -75% (-1.17 MMb/d) for light sour, -46% (-1.54 MMb/d) for medium, and -36% (-102.5 kb/d) for heavy sweet.

Imports of Canadian heavy sour surged 170% from 2009 levels to capture over 72% of all U.S. heavy sour imports over the twelve months ending Feb 2025 from an average of 26% in 2009.

• Canadian heavy sour barrels displaced supplies from all other sources. As of February 2025, the 12M rolling moving average of heavy sour imports from Mexico fell 68% from 2009 levels. Supplies from Venezuela, Columbia, and Ecuador, and Brazil fell 72%, 4%, 26%, and 81%, respectively.

U.S. medium crude imports from the Middle East were displaced by supplies from Canada and Latin America.

• Imports of medium crude from Saudi Arabia fell 67% (-554 kb/d) from the 2009 average to the twelve months ending Feb 2025. Medium imports from Iraq fell 59% (-253 kb/d) over the same period, while imports from Canada and Brazil gained 53.9% (279 kb/d) and 316% (120 kb/d), respectively.

Crude Input Qualities

The API gravity of crude processed by U.S. refineries has increased for all major regions, led by refineries on the Texas Gulf Coast that have increased from a regional weighted average of 28.6 in 2012 to 34.2 degrees in February 2025. The overall U.S. weighted average API gravity of crude inputs to refineries gained from 30.5 in 2012 to 33.2 degrees in Feb 2025.

While less drastic, U.S. refineries have similarly reduced the sulfur content of crude inputs.

• Weighted-average sulfur content of crude inputs to all U.S. refineries fell from 1.4% in Jan 2012 to 1.3% in Feb 2025.

• PADD 3 refiners’ average sulfur content fell from 1.55% in Jan 2012 to 1.37% in Feb 2025.

Looking Ahead

The Department of Energy will release updated numbers on U.S. production by API gravity this month. Last year’s release showed overall lower 48 production of crude with API gravity between 30-40 degrees was up 19% Y/Y over the first 10 months of 2023 and hit a new record of 4.75 MMb/d in September 2023.

• This compares to a 6.3% Y/Y increase in crude production with API gravity between 40-50 degrees to 5.9 MMb/d during the first 10 months of 2023.

• Texas’ output of crude with API gravity between 30-40 degrees reached 2.6 MMb/d in June 2023, surpassing production of crude with gravity between 40-50 degrees for the first time.

Near-term talks between President Trump and MidEast partners like Saudi Arabia could yield a transient increase in U.S. imports from the region to refill the Strategic Petroleum Reserve. While the accelerated OPEC+ production schedule could add supply to the market before SPR repairs and funding are finalized, the SPR is over 200 MMb below levels at the end of President Trump’s first term. The stockpiles have frequently appeared in recent commentary from Energy Secretary Wright and other members in the administration as well.

See you next Sunday.

ES.

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