By Arathy S Nair and Marianna Parraga

HOUSTON (Reuters) – U.S. oil refiners hunting to replace storm-lost U.S. Gulf of Mexico crude have been turning to Iraqi and Canadian oil, while Asian buyers have been pursuing Middle Eastern and Russian grades, analysts and traders said.

Royal Dutch Shell, the biggest producer of oil in the U.S. Gulf of Mexico said this week that damage to an off-shore transfer facility would limit Mars’ sour crude supply until early next year. The Mars sour grade of U.S. oil is used heavily by U.S. Gulf refiners and companies in South Korea and China, two top destinations for exports.

The United States exports an average of 3 million barrels per day. Most of this oil comes from its Gulf Coast. Refiners will have to compensate for Mars shutdowns, as overall fuel demand is returning to pre-pandemic levels.

Trades said that the U.S. has been looking to replace fourth-quarter deliveries with Basrah crude oil from Iraq due to the loss of as much as 250,000 barrels per days (bpd). Other countries received supplies from U.S. storage facilities.

Basrah’s crude oil has been a mainstay during previous disruptions. When U.S. sanctions against Venezuela reduced heavy crude grades to Gulf refiners in 2019, Iraq quickly boosted cargoes. Canadian heavy-oil supplier also saw a rise in their revenues.

EMERGENCY SUPPLIES

Exxon Mobil (NYSE:) and Placid Refining Co have received oil from the U.S. Strategic Petroleum Reserve (SPR), addressing immediate needs for sour crude.

SPR sour oil was requested by refiners looking to replace Mars barrels. A U.S. Gulf crude traders said that many others have purchased extra Basrah cargoes for October delivery. “Sour crudes are generally under pressure and their prices are very convenient.”

Mars crude oil traded at an upwards of $1.50 over WTI, but it was sold on Wednedsay for $2.25 less than the benchmark U.S. price, bringing back levels from before Ida. Nine of nine U.S. oil refineries which were shut down during Ida are now back in production.

Basrah will be loaded by Refiner Marathon Petroleum, a trader claimed. Traders added that refiners capable of processing and blending heavier crudes have expressed interest in Canadian grades and Latin American grades. Marathon did not respond to our request for comment.

U.S. Energy Information Administration initial data as of Tuesday revealed that Brazil and Mexico imports rose following the storms.

CUSHIONING EXPORTS

Of the up to 250,000 bpd of lost Mars crude production, about 80,000 bpd typically are sent to Asian refineries, according to cargo tracking firm Vortexa.

Matt Smith, a Kpler oil analyst said that South Korea accounts for around two-thirds Mars exports in this year. China’s Unipec was able to buy Mars ahead of the hurricane, while South Korea Energy bought Mars before it hit.

Unipec purchased 200,000 tonnes Russian Urals crude oil for delivery in October amid wider price differences.

GS Caltex Corp. South Korea’s second-largest refiner had a Mars cargo canceled. It was scheduled to arrive in November. However, the company still hasn’t looked for replacement crude.

Unipec’s parent company, Sinopec (NYSE :), did not respond to requests for comment after hours.