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U.S. Gulf Coast imports of straight-run fuel oil at record as global supply jumps

Imports of straight-run fuel oil (SRFO) to the U.S Gulf Coast were set to climb to record levels this month as Mideast and African suppliers ramped up exports and U.S. refiners scrambled for heavy feedstocks, according to data from ship tracker Kpler.

The increased imports of SRFO, a feedstock processed through secondary refining units and turned into products like gasoline and diesel, have helped fill a gap in heavy crude availability facing U.S. refiners.

Supplies of heavy crude tightened after Mexico curtailed oil exports, more Canadian grades began moving east with the start up of the Trans Mountain Pipeline, and amid ongoing OPEC+ production cuts.

The U.S. Gulf Coast has imported 224,000 bpd of SRFO so far this month, according to Kpler data, mostly from the Middle East and west Africa. That is nearly double last month's imports and up from 116,000 bpd a year ago.

The U.S. Gulf Coast is home to complex refineries, designed to run a heavier, sourer crude slate that yields more residual fuel oils like SRFO. Those oils are then processed further to eventually produce high-value products, such as gasoline and diesel.

More SRFO is available to the global market now as new refineries in the Middle East and Africa have come online. Those include the 615,000-bpd Al Zour refinery in Kuwait, an additional 230,000-bpd of capacity at Oman's Duqm refinery, and the 650,000-bpd Dangote refinery in Nigeria.

"The flows seem both a supply push and demand pull: Refining capacity additions in the Middle East and Nigeria mean greater availability on the supply side, while demand comes from rising refinery runs in the U.S. ahead of the summer driving season," Smith said.

Mideast Gulf loadings reached a record high in March at 612,000 bpd, a near-40% jump on the month, while two cargoes of SRFO have come to the U.S. from Nigeria's Dangote refinery, according to Smith.

"U.S. imports of SRFO are currently at their strongest monthly pace in six years," Kpler's Smith added.

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