BUZZ-U.S. refining stocks fall after Trump imposes tariffs

Shares of U.S. refiners fall after President Donald Trump imposed tariffs on Canada, Mexico and China

Tariffs will raise costs for the heavier crude grades that U.S. refineries need for optimum production

Taking effect on Feb. 4, the tariffs include a 25% levy on most goods from Mexico and Canada, with a 10% tariff on energy imports from Canada

Canada and Mexico are the top sources of U.S. crude imports, accounting for about a quarter of the oil U.S. refiners process, according to the U.S. Department of Energy

TD Cowen analysts expect U.S. refiners that run Canadian crude on the margin to switch to light sweet crude, increasing prices for WTI and Brent crude

U.S. Gulf Coast refiners are likely to back out Mexican and Canadian heavy crude and make arrangements to purchase crude from other heavy sour producers such as Iraq, says TD Cowen

"Switching will likely tighten medium and heavy sour differentials given less efficient trade flows... if it becomes too expensive to switch, refiners could run less efficient crude slates, reducing product supplied"

Shares of Valero Energy VLO.N, Marathon Petroleum MPC.N, Delek US DK.N, HF Sinclair DINO.N and Phillips 66 PSX.N down between 1% and 1.8%

Par Pacific PARR.N drops 2.7% and PBF Energy PBF.N slides ~6%