"Harvey" hits fuel supply in Mexico and other Latin American countries

Tropical Storm Harvey

could cause fuel shortages in Latin America after the United States gasoline production was shut at about 1 million barrels per day and diesel exports typically destined for countries such as Mexico .

Harvey barreled into Texas , the heart of U.S. oil and gas industry, on Friday as the strongest hurricane in more than 50 years .

The United States is the largest net fuel exporter in the world and most of these shipments come from ports in Texas and Louisiana. Harvey shut down the major fuel export ports in Corpus Christi and Houston .

“Any hiccup in U.S. refined product exports is highly disruptive to the supply chain given the dependency of nations like Mexico and other L atin American countries in the U.S.,” said Michael Tran , director of global energy strategy at RBC Capital Markets .

“The reliance on U.S. products is particularly key this year given that many refineries in Central and South America are running at abysmal levels.”

Latin American countries such as Mexico and Venezuela have become increasingly reliant on imports because they have failed to invest in expanding refineries to keep up with rising demand.

The U.S. exported 2.49 million barrels per day ( bpd ) of refined products and 100,000 bpd of crude to Latin America in the first quarter, according to the Energy Information Administration . Over 950,000 bpd ended up in Mexico - the biggest overseas market for American-made fuel.

A spokesperson for Mexican national oil company Pemex said its gasoline and diesel inventories were sufficient to make up any shortfall in supply Harvey may trigger.

He did not detail the volumes Mexico holds in stockpiles or how many days of demand could be covered with emergency supplies.

Aside from waterborne shipments, the United States also sends supplies to Mexico via rail and road, but those flows have been hit too.

Union Pacific Corp

, the no. 1 U.S. railroad, said it was moving rail cars in yards prone to flooding to high elevations and would curtail trains operating through areas likely to be hit by excessive winds and rain that will impact operations.

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