The Impact of the Closure of Keystone Could Be Larger than Expectations

Lower Inventories, Wider Differentials, and Crude Quality Issues

December 9, 2022

Main Takeaways

• The shutdown is expected to lower inventories at Cushing, Oklahoma, increase crude via rail from Canada, support WTI & Latin American crudes, and widen price differentials between WTI and Canadian crude.

• The impact of the shutdown on crude price differentials is larger than the impact on the overall crude prices

•  The impact of the shutdown on crude quality is more important than quantity.  Venezuelan crude oil additions will become more important than ever.

• If the closure of the Keystone crude oil pipeline lasts more than a few days, the Biden Administration may order another emergency release from the Strategic Petroleum Reserve (SPR).

IN DETAIL