Energy traders in the Houston area have been receiving pitches for heavily discounted crude oil with murky origins, Bloomberg reported. One intermediary offered up to 200,000 barrels of heavy-sour crude at a $30 markdown compared to West Texas Intermediate prices.
According to the report, suspicions arose among traders due to doubts about the oil’s true source. The crude was purported to be Mexican Heavy Residual, but the levels of certain elements within the oil did not align with typical Mexican crude characteristics. Pemex, Mexico’s state-run oil giant, also controls the majority of the country’s crude sales, raising further concerns about the authenticity of the oil being offered.
While offers of this nature are uncommon in the United States due to stringent market regulations, the global oil market is saturated with sanctioned barrels from countries like Iran, Venezuela, and Russia. Analysts estimate that these countries combined are exporting over 4 million barrels per day of discounted oil.
Meanwhile, Russia is facing economic uncertainty as a result of a $60-per-barrel price cap imposed on its crude exports. The country’s central bank officials are predicting “new economic shocks” in response to these measures. Moscow has criticized the West’s sanctions and price cap, and is deliberating potential retaliatory actions such as banning oil sales to certain nations or setting maximum price discounts for its flagship Urals crude against Brent.
The situation underscores the complexities and challenges facing the global energy market, as traders navigate uncertain offers and geopolitical tensions impacting oil prices.
