In New York on January 31 (Reuters) - Many U.S. oil refiners heavily rely on imported crude due to their operational setup to process heavier grades, particularly from Mexico and Canada. Refiners are anticipating clarification and bracing for possible tariffs on crude imports from Canada and Mexico by U.S. President Trump.
Trump stated on Friday a reduced tariff of 10% on Canadian oil and the likelihood of tariffs on oil and gas.
Potential tariffs on oil imports might escalate crude costs, prompting refiners to scale back processing. Midwest refineries handle approximately 70% of the 4 million barrels per day (bpd) of Canadian crude imports.
Phillips 66 warns of potential production cuts in the Midwest and Rocky Mountain regions where alternative crude sources are scarce if tariffs are imposed, possibly diverting the 457,000 bpd currently entering the U.S. to Europe or Asia.
"We would expect to see the heavy crudes firm a bit just on the inefficiency of logistics," said Brian Mandell, Phillips 66's executive vice president of marketing and commercial. "As the year progresses and OPEC increases output, we would expect these differentials to widen back out."
Phillips 66, HF Sinclair, and Par Pacific Holdings have significant exposure to Canadian crude, according to data from TD Cowen.
Valero Energy's Chief Operating Officer, Gary Simmons, noted during a call with analysts that their teams are evaluating various scenarios to adapt to potential changes. Valero is the second-largest U.S. refiner based on capacity.
HF Sinclair, Par Pacific, and Marathon did not respond immediately to requests for comment. The table shows the latest available data on the volume of crude oil top U.S. independent refiners imported from Canada and Mexico in November 2024.
Source: Data from U.S. Energy Information Administration - Data released on January 31, 2025.