Crude and Product Import/Export Dynamics
March 8, 2024
Top-line fundamentals show a tightening crude balance in Saudi due to continued voluntary cuts maintaining output at ~9.5mbd; however, a return of refinery utilization in the country of approximately 0.6 mbd between Feb 2024 and May 2024 (likely aided by strengthening distillate cracks during European maintenance season), will convert previous crude exports to product exports, particularly to the European market. As such, we anticipate lower crude volumes ex AG to Europe in the coming month(s), but instead favor increasing product flows, favoring LR demand - in fact, that trend line continues well into the year, assuming no change to OPEC production quotas.
Figure 1 – Saudi Arabia Crude Figures
Source: McQuilling Services
Additionally, we view the recent announcement by Russia to halt gasoline exports and the slow uptake of Dangote to produce gasoline (in fact, we would likely see more straight run fuels including LSSR and naphtha) could provide upward support for gasoline cracks in the coming months, which could sway demand from European refiners to lighter crudes (sourced from Western load regions). This backdrop of tighter KSA crude balances, European maintenance, lower gasoline supply from Russia and a slow Dangote uptake has the potential to reduce European imports of Middle Eastern grades in the coming months. At the same time, we should anticipate that local crudes (CPC, Libya) could be more readily available assuming a portion of these volumes would be re-routed around the Cape due to Red Sea tensions.
Share
Comments
You need to login to comment.
