Rising imports of Venezuelan crude into the US Gulf Coast are reducing refinery demand for Mexico-origin fuel oil as coker feedstock, pushing those volumes into the marine fuel blending pool, sources said this week.

The shift comes amid USGC refiners’ preference for Venezuela’s heavy sour crude grades following the recent easing of US sanctions and strong Gulf Coast refining margins.

According to S&P Global Commodities at Sea(opens in a new tab) data, USGC crude oil imports from Venezuela increased to 9.2 million barrels in January, up from 6.4 million barrels in December 2025.

“Refinery margins are good,” a USGC source said. “Difference is with Venezuela crude, [refiners] will produce more [residual fuel oil], hence requiring less Mexican [residual fuel oil] and alternative feed.”

The latest S&P Global Energy refining margin report highlights a notable rise in the Gulf Coast ULSD crack against WTI MEH, reaching $32.19/b, an increase of $2.04/b from the preceding five-day average.

Cracks remain very strong compared to recent months. In January, the USGC ULSD crack averaged $29.57/b, while December’s average was $28.57/b.

The ULSD outright price rose to its highest point in more than two months at $2.3976/gal, up 5.64 cents.

As USGC refiners process more Venezuelan crude, they are producing more residual fuel oil for use as coker feedstock, diminishing the need to supplement with Mexican residual fuel oil.

“It’s not like it’s a hard no to [Mexican HSFO], but obviously the Venezuelan crude gives them a resid-heavy crude option,” a second US source said.

In turn, some refiners with term contracts for Mexican HSFO purchases have reoffered those volumes to the marine fuel market.

“As fuel blenders, we are seeing more available now since the Venezuela news because refiners are backing out [of] Mexico fuel [oil] for Venezuela crude, making them longer,” the first US source added.

After early February saw some bid-side action in the USGC HSFO Platts Market on Close assessment process, activity since Feb. 9 has been exclusively offer driven.

Platts, part of S&P Global Energy, assessed Feb. 19 barge pricing up $1.05/b day over day to $57.35/b, as the physical market tracked rising USGC HSFO swap values. Offer-side activity during the MOC again tested notional value, mitigating the increase in the physical USGC HSFO market.
Source: Platts