Many U.S. oil refiners depend heavily on imported crude because their facilities are configured to process heavier grades, such as those from Mexico and Canada. Refiners are now preparing for U.S. President Donald Trump’s threatened tariffs on crude imports from these countries.
Tariff Details and Implications
On Friday, Trump announced that tariffs on Canadian oil would be lowered to 10%, with tariffs on oil and gas likely to take effect on February 18. A tariff on oil imports could increase crude costs, pushing refiners to reduce the amount of oil their facilities process. Refineries in the Midwest, which process about 70% of the 4 million barrels per day (bpd) of crude imported from Canada, could be particularly impacted.
Industry Reactions
Phillips 66 indicated that production cuts could occur in the U.S. Midwest and Rocky Mountain region if tariffs take effect, as alternative crude supplies are limited. The refiner expects the 457,000 bpd of Mexican crude entering the U.S. could be redirected to Europe or Asia. Brian Mandell, executive vice president of marketing and commercial at Phillips 66, noted that heavy crudes might see price increases due to logistical inefficiencies.
Company Preparations
Phillips 66, along with HF Sinclair and Par Pacific Holdings, has significant exposure to Canadian crude. Gary Simmons, chief operating officer of Valero Energy, stated that their commercial and optimization teams are preparing for various scenarios, including a possible 10% reduction in throughput.
Data on Crude Imports
Below is the latest data on the volume of crude oil imported from Canada and Mexico by top U.S. independent refiners in November 2024:
| Refiner | Canada (thousands of barrels) | Mexico (thousands of barrels) |
|—————|——————————-|——————————-|
| HF Sinclair | 5,060 | |
| Phillips 66 | 14,481 | 497 |
| Par Pacific | 1,356 | |
| Marathon | 15,535 | 1,488 |
| Valero | 1,147 | 6,599 |
Source: U.S. Energy Information Administration (Data released on January 31, 2025)
Source: Reuters
