Trump's tariff on Mexico could hit U.S. refiners, add to fuel costs

[libertybele]

This is only the beginning  -- well at least gold is rising 

Trump's tariff on Mexico could hit U.S. refiners, add to fuel costs

U.S. President Donald Trump’s threats to tax Mexican imports could disrupt a long-standing cross-border energy trade, hitting U.S. refiners that use Mexican oil by boosting prices, and raising concerns about potential retaliation by the world’s biggest buyer of U.S. energy products.

Mexico sends 600,000 to 700,000 barrels of oil to the United States every day, mostly to refiners that process that crude into gasoline, diesel and other products. Mexico buys more than 1 million barrels per day (bpd) of U.S. crude and fuel, more than any other country, and analysts are concerned that retaliatory tariffs from Mexico could disrupt that trade.

Trump on Thursday vowed to impose a tariff on all goods coming from Mexico, starting at 5% and increasing monthly until the surge of undocumented immigrants from across the border subsides.

The tariff would begin June 10, and so far Mexico has not said it would retaliate, as the two countries, along with Canada, are trying to finish a broad free-trade agreement to replace the 25-year-old NAFTA deal.

A sharp decline in Mexican oil supplies could raise the costs of fuels if U.S. refiners are forced to buy heavier crude grades from further away from the United States, which adds to shipping costs.

Crude traders, however, noted that most Gulf Coast refiners that buy Mexican crude are located in so-called Foreign Trade Zones, which allow them to avoid tariffs so long as the refined products are exported - though these refiners also supply U.S. markets.

Refiners have been using Mexican heavy crude grades in part to offset the loss of barrels from Venezuela, which has been under U.S. sanctions for months.

Maya crude, Mexico’s primary grade of oil, traded at a $6 a barrel discount to Brent, the international benchmark, on Thursday, according to analysts at Tudor, Pickering & Holt. They said a 5% tariff would reduce that discount by half, making those imports costlier.................

https://www.kitco.com/news/2019-05-31/Trump-s-tariff-on-Mexico-could-hit-U-S-refiners-add-to-fuel-costs.html

[IsailedawayfromFR]

This is only the beginning  -- well at least gold is rising 

Trump's tariff on Mexico could hit U.S. refiners, add to fuel costs

U.S. President Donald Trump’s threats to tax Mexican imports could disrupt a long-standing cross-border energy trade, hitting U.S. refiners that use Mexican oil by boosting prices, and raising concerns about potential retaliation by the world’s biggest buyer of U.S. energy products.

Mexico sends 600,000 to 700,000 barrels of oil to the United States every day, mostly to refiners that process that crude into gasoline, diesel and other products. Mexico buys more than 1 million barrels per day (bpd) of U.S. crude and fuel, more than any other country, and analysts are concerned that retaliatory tariffs from Mexico could disrupt that trade.

Trump on Thursday vowed to impose a tariff on all goods coming from Mexico, starting at 5% and increasing monthly until the surge of undocumented immigrants from across the border subsides.

The tariff would begin June 10, and so far Mexico has not said it would retaliate, as the two countries, along with Canada, are trying to finish a broad free-trade agreement to replace the 25-year-old NAFTA deal.

A sharp decline in Mexican oil supplies could raise the costs of fuels if U.S. refiners are forced to buy heavier crude grades from further away from the United States, which adds to shipping costs.

Crude traders, however, noted that most Gulf Coast refiners that buy Mexican crude are located in so-called Foreign Trade Zones, which allow them to avoid tariffs so long as the refined products are exported - though these refiners also supply U.S. markets.

Refiners have been using Mexican heavy crude grades in part to offset the loss of barrels from Venezuela, which has been under U.S. sanctions for months.

Maya crude, Mexico’s primary grade of oil, traded at a $6 a barrel discount to Brent, the international benchmark, on Thursday, according to analysts at Tudor, Pickering & Holt. They said a 5% tariff would reduce that discount by half, making those imports costlier.................

https://www.kitco.com/news/2019-05-31/Trump-s-tariff-on-Mexico-could-hit-U-S-refiners-add-to-fuel-costs.html

What I see is the price of heavy crude is artificially high right now as the US refineries bottlenecked themselves in their decisions to reconfigure to accept heavy crudes.

The reason they did this was that years ago they forecasted that the domestic supply of light crudes was declining significantly (incorrect forecast) and to take advantage of a large differential price between light and heavy crudes.

The latter has tightened, largely due to the demand into those refineries, but also due to the lower amounts of production most recently from the heavy Canadian crudes.

So the refineries created their own problems from inaccurate forecasting.

[thackney]

4-Week Avg U.S. Imports from Mexico of Crude Oil
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W_EPC0_IM0_NUS-NMX_MBBLD&f=4

[Wingnut]

The chicken little's are pouring it on these days with the dooms and the gloom forecasts of "could" as fact of what will be.