540,000 Barrels of Malaysian Fuel Oil Headed to the U.S. West Coast

More than 540,000 barrels of low-sulfur residual fuel oil from Malaysia are en route to refineries on the U.S. West Coast. The vessel 'Solomon Sea' is transporting this cargo, marking the first such occurrence since 2023. The expected arrival time is early September. LSSR fuel oil is used as a feedstock for further processing in refining, and trading interest increases when refining margins are high. The cargo departed from the PRefChem refining complex in Johor, Malaysia, but the final discharge location and purchasing refinery have not been specified. PRefChem is a joint refining and petrochemical complex between Petronas and Saudi Aramco, with a refining capacity of 300,000 barrels per day. The U.S. West Coast is a region sensitive to external supply chains, coinciding with a reduction in California refining capacity and an increased reliance on imports. S&P Global reported that Asian suppliers are exploring export opportunities until 2025. Tensions in the Middle East are also impacting supply chains, and U.S. refining margins recently hit record highs. U.S. gasoline inventories fell by more than 1.5 million barrels to 210.5 million barrels for the week ending July 10. This shipment illustrates the increasing structural reliance of the U.S. West Coast on Asian supply chains.