He Ain’t Heavy, He’s My (Opec) Brother

Algeria hopes to reconquer the US market after its direct crude oil exports to North America faded to zero over the past five years, edged out by a tide of similar light US shale oil. The strategy is closely tied to Venezuela, Algeria’s Opec ally, which has offered the Algerians and other members of the producers’ club facing similar difficulties, an opportunity to blend their crudes with its extra heavy output and market it to US refiners.

The likely success of such a venture is difficult to gauge but the proposal is yet another sign of the marketing challenges faced by Opec producers, particularly the likes of Algeria, Angola and Nigeria, all of which produce light grades that US refiners no longer need. But the venture, if it ever gets off the ground, is not without precedent: past efforts to create crude cocktails to suite a particular market have failed miserably. In 2011, when the world lost nearly all Libyan output, Saudi Arabia came up with the notion that it could fill the void by creating a super-light, low sulfur blend mimmicing Libyan crude. But the Saudi cocktail found almost no takers: while the API gravity of the blend was high, the sulfur content was well above Libyan grades.


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