Todd Fredin, Executive Vice President of Supply, Trading and Logistics at Motiva Enterprises, stated that reduced shipping costs from an improved ability to load larger vessels with clean products has changed the direction of the Atlantic basin arbitrage. Fredin remarked, "Global crude trade has probably stayed pretty steady. Global product trade has shot way up." US refiners have anticipated slowing domestic demand for refined products and have shifted focus to overseas markets, such as Latin America. Furthermore, export markets will still accept fuels that do not meet US Tier 3 sulfur standards. On the other hand, Fredin noted that the trade of products does not have a hedging market to offset volatile freight costs, which has led to increased interest in chartering. Additionally, destination ports will have to upgrade infrastructure to handle larger vessels. Meanwhile, trading between the US, Latin America, and Europe will be more sensitive to available freight rates.
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