Heavy crude builds in the Americas as tanker costs squeeze exports

Heavy crude is accumulating in North and South America as costly tanker journeys constrain exports to Asia and Europe, Reuters reported on October 12. Buyers in those markets are seeking barrels, but US refiners have limited capacity to absorb more of the region’s supply. The result is a widening gap between prices near producers and the cost of getting oil to buyers.

The split comes while benchmark oil prices remain above $100 a barrel, according to Reuters. Heavy crude sells for less than lighter grades and can offer refiners an attractive margin when transport is affordable. The reported freight costs now take a substantial share of that price advantage, making a cheap barrel at its point of sale much less cheap on arrival.

How tanker costs change the price of heavy crude

Signal Maritime analyst Georgios Sakellariou estimated that shipping a supertanker from the US Gulf Coast to Europe cost about $46 million in the week before the report. That worked out to roughly $24.50 a barrel, including ship-to-ship transfer and other costs. Before the Iran war began in late February, the comparable estimate was $6.5 million, or about $4 a barrel.

The longer voyage to Asia was costlier still. Reuters reported tanker costs from the Americas to Asia above $80 million, or about $40 a barrel, in the prior week, against roughly $10 million to $15 million near the start of the year. It said the cost of hiring a supertanker from the US Gulf Coast to Asia had more than quintupled since February.

Prices at the source and the limits of US refining

Argus Media data cited by Reuters showed heavy grades from Canada, Colombia and Ecuador down by more than $10 a barrel and at six-week lows. On the Thursday before publication, Western Canada Select was around $74 a barrel, Colombia’s Vasconia around $84 and Ecuador’s Oriente around $76. Two traders put Venezuelan crude at about $74.50. Those figures exclude shipping and insurance and are snapshots, not October 12 delivered prices.

Adding the reported $40-a-barrel Asia freight estimate to a $74 origin price illustrates why the discount alone does not settle a buyer’s calculation. It is only an illustration: the cited prices cover particular grades on a Thursday, while the freight figure is an estimate for a different period. Insurance and the terms of an individual cargo would also matter; the reporting does not provide a comparable delivered quote for each grade.

US Gulf Coast refiners have bought as much heavy crude as they can process, according to analysts and traders cited by Reuters. High diesel prices give them an incentive to run heavy grades, which tend to yield more diesel than lighter crude. But processing more heavy oil requires greater use of cokers, equipment that converts residual crude into feedstocks for diesel and gasoline.

The wider US refining system is also operating hard. Reuters put average weekly refinery capacity utilization so far in 2026 at 93.5%, citing the US Energy Information Administration, and called it the highest in 28 years. Separately, the EIA’s October 7 weekly table shows recent readings ranging from 92.5% to 98.0%. Those individual readings support the picture of high recent activity; they do not themselves establish the reported year-to-date average.

Capacity is not the only constraint. Many US refineries are configured for offshore Gulf of Mexico grades such as Mars Sour, Reuters reported. Canadian or Venezuelan crude may require blending with lighter feedstock before processing. A refinery’s ability to take another heavy barrel therefore depends on its equipment and crude mix, as well as its overall operating rate.

What is known about the supply build

Several supply conditions preceded the October report. Reuters said Venezuelan exports had surged after the US captured former president Nicolas Maduro in January and began pushing to reactivate the country’s oil sector. It also reported record Canadian output and a US government release of more than 130 million barrels from its emergency reserve. Those are contributing conditions described in the report, rather than developments first occurring on October 12.

The reporting does not put a total on heavy crude inventories or identify the size and location of individual storage builds. It also offers no timetable for lower tanker costs. For now, the documented constraint is economic and physical: exporters need available ships at workable prices, while US refiners already running at high rates have limited scope to take the excess barrels.