US crude heads to Israel

OREANDA-NEWS. February 25, 2016. Energy trader Trafigura has sold a cargo of west Texas Intermediate (WTI) crude to Israel, the third US crude cargo to move across the Atlantic since the US oil export restrictions were lifted in December.

Only a handful of US crude cargoes have moved to foreign markets since the ban was lifted because of a combination of infrastructure constraints and a narrow spread between WTI to Ice Brent. But the deepening discount of WTI to Ice in recent weeks has made such deals more likely.

While multiple ships have been fixed for various destinations, many have fallen through and only three cargoes have discharged so far, including two to Europe arranged by Vitol and a 550,000 bl cargo last month for Venezuelan state-owned oil company PdV. Most recently, Cosmo Oil hired the Suezmax Istanbul for loading a mix of crude and condensate to Asia-Pacific while Mitsubishi subsidiary PDI fixed the Energy Puma to carry a condensate cargo to the same region. Both tankers were at the Eagle Ford crude shipping hub of Corpus Christi, Texas, last week.

The 700,000 bl cargo Trafigura has sold to Israeli refiners may be the first of several cargoes of WTI the energy trader said it plans to move across the Atlantic. Trafigura is looking to charter vessels to Israel, according to shipbrokers, but no fixtures have been confirmed by Argus.

The 700,000 bl cargo would likely travel on either an Aframax or a Suezmax. The cost of transatlantic Aframax freight loading in the USGC for a 70,000t cargo is roughly \\$14.79/t while the rate along the same route for a Suezmax is \\$6.54/t. But loading on a Suezmax would likely necessitate reverse-lightering as most USGC ports cannot handle direct Suezmax loading.

Trafigura said shipping WTI crude to Europe and Israel for contracts due to be delivered in March is profitable.