The production cut announced by OPEC will increase competition in Latin America

OPEC and its allies are coming to an end, in a surprise move to cut their output of crude, which is mostly high in sulfur. Putting Latin America in the spotlight as a potential source of substitution.

(Read: OPEC+ decision could affect global inflation).

This could become a battlefield for US refiners who want to keep it Strangers away from those supplies as they get ready for the summer seasonwhere it is usually in high demand in North America.

For years, American buyers have developed supply lines across America, while whatMajor OPEC producers such as Saudi Arabia direct most of their oil to Asia, An area that offers the Kingdom the most profitable returns.

Competition may arise when Asian refiners are already actively buying heavy crude from South America and Canada, driving up their prices. And but she There may not be enough to go around.

(See: Pipeline attacks are already 44% of registrants in 2022.)

Canadian barrels have been restricted due to seasonal maintenance and Supply from Latin America will not be sufficient to offset the announced cuts by the Organization of Petroleum Exporting Countries.

This could cause heavy oil prices to rise even further, leading to fuel inflation. “US buyers will struggle to keep sour crude from Latin America and the Gulf of Mexico inland, especially as flows from the Middle East to the US continue to decline.Or said Matt Smith, senior oil analyst for the Americas at industrial consulting firm Kpler.

He added that Latin America exports more medium and heavy sulfur crude than the United States produces in the Gulf of Mexico, making southern producers invaluable.

(Read: In January, oil production rose 4.4% and gas production fell 8%).

bloomberg