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The day was tough for US refiners in the Gulf of Mexico hit by the president. Trump's threats to impose a tariff on all goods from Mexico and EPA's widely expected decision to allow the year-round sale of gasoline E15.
A new tariff could disrupt long-standing cross-border energy trade: Mexico sends 600,000 to 700,000 barrels / day of oil to the United States, mainly to refiners who turn crude oil into gasoline, diesel and other products, while Mexico buys over 1 million bbl / day US crude and fuel, more than any other country.
A sharp decline in Mexican oil supply could raise fuel costs if US refiners were forced to purchase heavier grades of crude at greater distances, thus increasing shipping costs; refiners used Mexican heavy crude grades in part to offset the loss of barrels from Venezuela, which is subject to US sanctions.
"For refiners on the Gulf Coast already affected by the sanctions of Venezuela, Iran, Canada and OPEC, this adds an insult to the injury," said Sandy Fielden of Morningstar. "The number of alternative sources of heavy crude is decreasing."
The companies most affected would be the refineries of Royal Dutch Shell (RDS.A -0.5%) The Deer Park plant in Texas; Shell is the largest importer of Mexican crude, with 148,000 b / d in February.
Valero Energy (VLO -3.8%) and Chevron (CVX -0.7%) are the second largest buyers, yielding more than 200,000 bbl / day.
Cowen analysts say that the impact of tariffs on refiners would begin to appear in the third quarter results; the company says PBF Energy (PBF -5.6%) and VLO are the most exposed to impacts, while Phillips 66 (PSX -1.7%) and Marathon Petroleum (MPC) -2.9%) the exposure is less pronounced due to their more diverse nature.
Also: HFC -4.1%, DK -4.2%, CVI -2.8%, CLMT -4.2%, XOM -1.2%.
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