(Bloomberg) -- Concerns that oil sanctions will curtail supplies from Russia and Iran are upending the oil market’s usual price patterns in the US Gulf Coast market, home to the country’s largest oil refining hub.
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The price of low-quality heavy oil, which usually trades at a discount to lighter Permian crude, is strengthening on fears of new sanctions.
Higher quality crude from the Permian is quoted at the smallest premium to heavy sulfurous Canadian Cold Lake since March 2022. The differential, now at $4.25, narrowed after the US ratcheted up sanctions against Russia, and ports in China enhanced compliance by turning away ships that are on the US sanctions list, curbing supplies from places like Iran.
The price squeeze is so steep, Gulf Coast fuelmakers make move to buy more light crude, according to market participants.
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