American light crude from shale wells in Texas replaced Iranian oil in Asian market
A new grade of American light crude is making its way to oil-starved buyers in Asia, giving relief to some of the region’s biggest plastics makers as they seek alternatives to feedstock from Iran.Texas has an abundance of this fuel. It is also adding infrastructure to make exporting even easier.
South Korean refiners and petrochemical makers are purchasing West Texas Light crude, a new American grade that’s produced in the Permian Basin of west Texas and New Mexico. Hyundai Oilbank Co. and S-Oil Corp. most recently bought the grade for delivery in September and October. The oil, which is light and sweet in nature, yields a high proportion of naphtha and other distillates when processed, with low levels of impurities such as sulfur.
Processors across Asia have been keen to find substitutes for Iranian crude and an ultra-light oil known as condensate, after the U.S. pared back waivers permitting purchases from the Persian Gulf state. In South Korea, companies with purpose-built units that break down condensate into the building blocks of plastics, however, have been the worst hit due to a halt in Iranian South Pars flows. That prompted buyers to snap up alternative supplies from Qatar, and haul replacements from as far away as Nigeria, Norway and the U.S.
Hyundai Oilbank purchased the West Texas Light crude for delivery in October, while S-Oil bought 1 million barrels of the grade for September delivery, according to traders with knowledge of the matter who asked not to be identified as the information is private. For S-Oil, the West Texas Light grade will replace costlier supplies of Qatari condensate, since the company doesn’t typically buy Iranian oil.