Canadian crude will be priced for tariffs: Phillips 66

Spanish Market: Crude oil, Oil products
31/01/25

Western Canadian crude will continue to flow to US refiners, but at a greater discount if President Donald Trump enacts tariffs on imports from that country, Phillips 66 said today.

In the event of tariffs, the Western Canadian Select (WCS) discount to US light sweet crude WTI will eventually widen to incentivize crude to move into the US, Phillips 66 executive vice president of commercial Brian Mandell said during an earnings call. WCS' discount to WTI was around $15.25/bl on Friday afternoon.

In the Rocky Mountain and midcontinent regions, where refiners have fewer alternative supplies, the "crack margins will also have to do some work," he said.

Mandell said that the first effect of Canadian tariffs would be the filling of the 590,000 b/d Trans Mountain Expansion (TMX) pipeline, which sends crude to Canada's west coast, followed by a replenishing of storage in western Canada. TMX has run well below its full capacity since startup in May 2024 but it is not clear how much spare capacity is left. About 374,300 b/d of crude from the combined Trans Mountain was exported via tanker in January, according to data from Vortexa.

About 80pc of Canada's 5mn b/d of crude production flows downstream to US refiners, with US imports of Canadian crude reaching a record high of 4.42mn b/d in the week ending 3 January, according to the Energy Information Administration (EIA). The single largest conduit is Enbridge's 3mn b/d Mainline system, which reaches into Chicago to serve midcontinent refiners and hands off crude to other lines that go to the US Gulf coast for refining or export.

The White House said today that president Donald Trump will proceed with plans to impose 25pc tariffs on imports from Canada and Mexico and 10pc on imports from China on 1 February.

The White House pushed back on reports that the tariffs would be delayed and declined to say whether Trump made a decision on whether to exclude Canadian and Mexican crude from the tariffs.

Mexico sends far less crude to the US. Mexican crude imports to the US averaged 450,000 b/d in November 2024, according to the most recent EIA monthly data.

Mexican imports of crude into the US would likely be displaced if the tariffs are enacted, Mandell said.

Mexican crude will move to Europe and maybe Asia and other crudes will come in, he said. Heavy crude prices would rise a bit on the inefficiency of logistics but those differentials should dissipate as OPEC puts more oil onto the market as the year goes on, Mandell said.

US refiner Valero said yesterday that the tariffs could cause a 10pc cut in refinery runs depending on how long the tariffs go and how fast they are implemented.

By Eunice Bridges

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

03/03/25

Venezuela oil can flow despite sanctions U-turn

Washington, 3 March (Argus) — Venezuelan crude could remain available to most current buyers in the near future even though US president Donald Trump's administration says it is closing exceptions in sanctions against Caracas. Trump on 26 February said he would not extend a sanctions waiver that allowed Chevron to lift crude cargoes from its joint venture with Venezuelan state-owned PdV. US secretary of state Marco Rubio last week separately said via social media that he would recommend terminating all "oil and gas licenses that have shamefully bankrolled the illegitimate regime" of Venezuelan president Nicolas Maduro. Under normal circumstances, such announcements by the US administration include detailed guidance from the Treasury Department's sanctions enforcement arm, the Office of Foreign Assets Control (OFAC). But OFAC in its guidance issued on Sunday, days after Trump's announcement, merely said it was "preparing to take action to wind-down General License 41 and other specific licenses as appropriate." General license 41 is the authorization for Chevron's activities in Venezuela, which was issued on 26 November 2022. "We will issue additional guidance to assist implementation concurrent with any changes to the authorization(s)," OFAC said. The 2022 authorization for Chevron was auto-renewed every month and allowed the company to operate in Venezuela for a six-month period after each renewal. Since Trump noted that he would not renew the license on 1 March, the terms of that license in theory allow Chevron to continue loading cargoes from Venezuela until at least 1 August. Multiple other foreign oil companies and traders hold OFAC licenses with sanctions waivers allowing them to load crude and other energy commodities from PdV. Former president Joe Biden's administration issued such authorizations because their terms do not involve direct payments to PdV. Most cargoes are loaded by operators in exchange for writing down debts owed to them by the Venezuelan government or by PdV. Caracas began to selectively default on its debts to foreign creditors in 2018, and foreign creditors have advanced claims totalling over $60bn. A group of those creditors have succeeded in forcing a sale of PdV-owned US refiner Citgo through a yet-incomplete auction overseen by a US federal court in Delaware. OFAC typically does not disclose sanctions waivers granted to individual operators. Some of them, including Spain's Repsol and Italy's Eni, previously have made public disclosures about holding limited sanctions waivers. It is also not clear if sanctions waivers issued to oil field service companies Halliburton, SLB, Baker Hughes and Weatherford, to enable their continued presence in or a future return to Venezuela, will remain in place. Trinidad and Tobago, which has a sanctions waiver to pursue a project to import Venezuelan gas for a Trinidad-based LNG project, said last week it "will do all in its power" to preserve cross-border oil and gas production agreements. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Sheinbaum urges calm ahead of Trump tariff deadline

03/03/25

Sheinbaum urges calm ahead of Trump tariff deadline

Mexico City, 3 March (Argus) — Mexico will deliver a composed and measured response if the US imposes tariffs on its imports as threatened tonight, although there has been no definitive word on what will happen, President Claudia Sheinbaum said. US president Donald Trump postponed an early February deadline to impose 25pc tariffs on all Mexican and most Canadian goods by a month to allow more time for negotiations over what he said were concerns over the flow of drugs and immigrants into the US. This followed Sheinbaum pledge to send another 10,000 national guard troops to the border to curtail drug trafficking, with a specific focus on fentanyl. Mexico has continued talks with the US this past month to demonstrate results of its efforts. But the Mexican government does not yet know if this has been sufficient to convince Trump to further pause tariffs, Sheinbaum said this morning. "Whatever the decision is, we will have a plan to respond," Sheinbaum said during her daily press conference. Mexico has a plan that includes retaliatory tariffs as an option, Sheinbaum said last month. US commerce secretary Howard Lutnick said on a broadcast interview Sunday that the US will likely implement the tariffs on Canada and Mexico, but that Trump could lower the tariffs below 25pc. Lutnick described the situation as "fluid", leaving open the possibilities for last-minute negotiations. Sheinbaum could still have a call with Trump before the deadline expires, much like last month, when the tariffs were postponed following talks between the presidents , Sheinbaum said last week. Sheinbaum said such a call could come today. Tariffs would likely curtail energy trade between the US and Mexico. Nearly all of Mexico's roughly 500,000 b/d of crude shipments to the US in January-November 2024 were waterborne cargoes sent to US Gulf coast refiners. Those shipments in the future could be diverted to Asia or Europe. Mexico also imports much of its road fuels and LPG from the US. But hitting these goods with retaliatory tariffs would be costly for Mexico and may be unlikely, according to market sources. By Cas Biekmann Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US sends mixed signals on Canada, Mexico tariffs

03/03/25

US sends mixed signals on Canada, Mexico tariffs

Washington, 3 March (Argus) — President Donald Trump's top economic advisers are providing conflicting guidance on the tariffs the US will impose on Canadian and Mexican imports as early as Tuesday. The effective date for the tariffs, which Trump announced via an executive order a month ago, is 12:01am ET on Tuesday. The executive order calls for imposing a 10pc tax on Canadian energy imports, a 25pc tariff on non-energy imports from Canada and a 25pc tariff on all imports from Mexico. Trump last week said that the tariffs will go into effect as planned. But US treasury secretary Scott Bessent over the weekend referenced a proposal by Mexico City to match the level of tariffs Trump has leveled or is planning to impose on imports from China, as a way to avoid a trade war between the US, Mexico and Canada. "It would be a nice gesture if the Canadians did it also, so in a way we could have ‘Fortress North America' from the flood of Chinese imports," Bessent said in a televised interview. Trump ordered a 10pc tariff on all imports from China, effective on 4 February. He is threatening to double that tax on Tuesday. The rate would be in addition to all previously imposed tariffs on imports from China. US commerce secretary Howard Lutnick, in turn, said on Sunday that the import taxes on Canada and Mexico would proceed as scheduled, but their exact levels may not be as high as set out in Trump's order last month. "There are going to be tariffs on Tuesday on Mexico and Canada," Lutnick said. "Exactly what they're going to be, I'm going to leave that for the president to decide." Trump's economic adviser Kevin Hassett separately suggested that the tariffs could go into effect at the levels Trump set, but that the White House could lower them over time if talks with Canada and Mexico on border security are successful. The Canada and Mexico tariffs are not in place yet, but vast segments of the energy industry — oil and gas producers, refiners, pipeline operators, traders — already are bracing for potentially disruptive outcomes. US independent refiners, already facing weaker margins, falling demand and regulatory uncertainty in their burgeoning renewables businesses, expect that tariffs will lead to higher feedstock costs and will cause some to reduce runs, cutting further into profits. A major European energy trading company has redirected some volumes of natural gas that were scheduled to flow across the US border into Canada to reduce the company's exposure to the threat of impending tariffs. The imposition of tariffs after decades of free trade in energy across North America is expected to create legal uncertainty in contractual obligations related to the payment of tariffs and reporting requirements. The current US import duties on crude are set at 5.25¢/bl and 10.5¢/bl, depending on crude quality. The administration has said the new tariff would be based on the value of the commodity — without specifying how that will be calculated and at what specific point during the transportation process. US government agencies are not expected to clarify the implementation details until Trump's executive order on tariffs goes into effect. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Q&A: ExxonMobil sees pathway to eight Guyanese projects

03/03/25

Q&A: ExxonMobil sees pathway to eight Guyanese projects

New York, 3 March (Argus) — ExxonMobil has a "line of sight" to eight projects in Guyana, which will help drive up production from the prolific offshore Stabroek block in coming years. And more is possible as the prospecting licence for the block still has another two-and-a-half years to go, ExxonMobil's Guyana president, Alistair Routledge , told Argus' Stephen Cunningham in an exclusive interview on the sidelines of the recent Guyana Energy Conference and Supply Chain Expo in Georgetown, Guyana. How will this year's general elections affect your operations in Guyana? We take a long-term perspective. Our job is to work with whichever administration is voted in, and to ensure that it's a collaborative relationship, it honours past commitments, and also that it ensures the long-term attractiveness of this location for future investment. How do you view Guyana's shallow-water blocks? We participated in the 2022 licensing round, and we were awarded the S8 block, along with our partners, [US firm] Hess and [China's] CNOOC. We continue in our discussions with the government to try to finalise a petroleum agreement. What about other deepwater blocks? We recently relinquished our interest in the Kaieteur block. Just as we looked at the opportunity space there, it didn't stack up in our global portfolio of opportunities. But we did drill a well that encountered oil in the Kaieteur block, so we think we've helped derisk it for the remaining players. Canje block — we still hold equity in that, we're still the operator. I think it's three wells we've drilled in the Canje block. So we've taken the data from those wells, we're revisiting the seismic and figuring out is there another prospect to drill? Can you talk about your new state-of-the art offices here? These are deploying the latest digital technologies, particularly control room technologies. The fact that we pre-invested in a fibre optic network, so a loop to line that goes from onshore through the offshore fields and then back again, to enable us to transmit information in huge quantities, but also to have very little latency in those communications, which you'll probably understand for control room operations is critical. [Floating production storage and offloading unit (FPSO)] Liza Destiny is not connected to the fibre optic, but all of the subsequent FPSOs either are or will be, and that enables them to have an onshore remote operation. Starting from April, we'll start getting those control rooms up and running and, more gradually, migrate the control room operators from offshore to actually operating 24/7 from onshore. What are the lessons that can be learned from Guyana? The partnership between the government and the operating companies is essential. Having a long-term perspective, creating a shared vision, and then working together to achieve it. That has been one of the strengths in Guyana. Then it's the partnerships that live within the industry, or the prime suppliers, the local suppliers with the overseas expertise, bringing all of that together. What about natural gas? We always have kept an eye on the value and opportunity space with the associated gas on the oil fields, but the first priority has always been to ensure that we're maximising the overall recovery of resource. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Guyana’s boom tests the ‘oil curse’ challenge

03/03/25

Guyana’s boom tests the ‘oil curse’ challenge

New York, 3 March (Argus) — Passengers arriving at Cheddi Jagan International Airport just south of Guyana's capital do not have long to wait to see first-hand how a recent oil boom is transforming the economic fortunes of this tiny South American nation. In the arrivals hall, visitors are greeted with billboards advertising everything from heavy machinery to elite security services and banking. And on the hour-long drive into Georgetown, signs of a construction spree are everywhere as work crews lay fresh tarmac on a road lined with lumber yards and building firms. Yet the once-in-a-generation oil discovery at the giant Stabroek block 120 miles off the coast of Guyana by an ExxonMobil-led group in 2015, which has catapulted the once impoverished nation into the world's fastest-growing economy, is still in its early stages. And Guyana's emergence as the newest petrostate will see the former British colony with a population of 800,000 become a key source of non-Opec supply growth, with output due to rise to 1.3mn b/d by the end of the decade from 650,000 b/d this year as new projects come on line. ExxonMobil's experience in Guyana has been extraordinary, and Stabroek's full potential has yet to be fully tested. "In most basins, this takes even two decades to get to the point from discovery to development. Here we are a decade in — we're already at 650,000 b/d and yet we are still very much exploring the basin and testing for new plays," the US major's Guyana president Alistair Routledge tells Argus . With two and a half years yet to run on its exploration licence, "there's another third of the block that we haven't been able to access as yet", he says. "The running room here in Guyana remains exciting." But many locals complain that the country's newfound oil windfall has been slow to trickle down to the general population, while poverty rates remain high, especially in rural areas. And a dependence on oil also risks leaving Guyana, located on South America's northern coast bordering Venezuela, Suriname and Brazil, at the mercy of volatile commodity markets. The jobs bonanza that followed the discovery of billions of barrels of crude is welcome, but taxi drivers grumble that training to get a foothold in the oil and gas industry is expensive and can be difficult to come by. That has led the government to offer free tuition and expand training opportunities. Its record on spreading the benefits of the country's oil boom will be put to the test in national elections later this year. Security concerns For the hundreds of industry executives who descended upon the Guyana Energy Conference and Supply Chain Expo this month, sharing in the spoils of the oil boom was the key draw. Outside the venue, dozens of booths were crammed into an exhibition centre. Travel operators, shipping brokers and a real estate firm pitching Guyana's first Florida-style gated community competed for the attention of conference attendees alongside oil and gas service providers. There was also a disproportionately large number of private security firms, with one offering services ranging from defensive driving to tests for substance abuse and first aid. Inside the conference, government ministers talked up their efforts to diversify the economy as well as manage the country's new oil riches at the same time. Keen to avoid being tagged with the "oil curse", whereby nations that make sudden discoveries often end up worse off because of mismanagement, Guyana is boosting its non-oil sector including agriculture, mining, tourism and construction. "So far, we've been doing a good job," natural resources minister Vickram Bharrat said when asked if the nation could avoid a similar fate as some of its less fortunate predecessors. That has led to up-and-coming producers from Suriname and Namibia beating a path to its door as they seek to learn how Guyana has handled its oil wealth in such a short period of time. Ahead of the elections, the main opposition party has made noises about renegotiating the terms of Guyana's production-sharing contract (PSC) with the ExxonMobil-led consortium. The current administration has ruled out such a move for fear of alienating foreign investors, even though it concedes the terms of the contract could have been better. "Our position has been crystal clear," Bharrat told Argus. "We are not renegotiating the Stabroek PSC," he said. For its part, ExxonMobil has cautioned against any move that would undermine its long-term investment plans and called for contract terms to be respected. ExxonMobil, operator at Stabroek with a 45pc stake, says 2025 is shaping up to be a "very pivotal" year for the company in Guyana as the pace of projects speeds up. ExxonMobil also acknowledges the Guyanese government's impatience for faster progress on natural gas developments. "We want to move quickly," Routledge told the energy conference. "But for those in the industry, you will understand the additional complexity and challenges that gas brings." That includes higher transport and storage costs than oil as well as a lower energy density. Initial plans include a gas-to-energy project to fuel a power plant, for which the pipeline segment is already complete. And ExxonMobil sees further opportunities to build out gas production to potentially support data centres behind the artificial intelligence boom, and a fertilizer plant, as well as accessing global markets through LNG technology. Disputed land On the eve of the energy conference, six Guyanese soldiers were wounded in a border skirmish with a suspected Venezuelan gang, risking a further escalation in long-running tensions between the two nations. Venezuela has long laid claim to the resource-rich Essequibo region, which covers two-thirds of Guyana's territory. The territorial dispute has only worsened since Guyana's unprecedented offshore discovery, with Venezuela at one stage threatening to annex the region. The issue has been referred to the International Court of Justice, but Venezuela has disputed the court's jurisdiction. And in the meantime, Guyana has forged closer military ties with the US. The US ambassador to Guyana has noted that US secretary of state Marco Rubio wasted no time in touching base with the nation's president Irfaan Ali, calling him seven days into the start of the new Donald Trump administration. According to the readout of their conversation, Rubio doubled down on US support for Guyana's sovereignty in the face of the "bellicose actions" of Venezuelan president Nicolas Maduro and his "cronies". With the new US administration indicating this week that it may once again tighten sanctions on Caracas by not extending a sanctions waiver there for Chevron, cross-border tensions with Georgetown may remain high. But Guyana's government is sitting on the sidelines while a dispute between ExxonMobil and rival US major Chevron over the future of US independent Hess' 30pc stake in Staebroek plays out. Chevron's pending $53bn takeover of Hess was largely driven by that stake, but ExxonMobil argues it has a right of first refusal for Hess' share. An international arbitration case will resolve the issue in May. ExxonMobil will remain operator whatever the outcome, Routledge tells Argus. "Our position was clear from the start," Bharrat says. "If that was not going to affect the operations in Guyana — and we were told it will not — then we are fine." Guyana has a "good relationship" with Hess, which has agreed to buy carbon credits from the government, he says. "We have no issue with Chevron coming in either. Chevron would add value to the Guyana basin." By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more