Page 6 - AsianOil Week 29 2022

AsianOil COMMENTARY AsianOil

Middle East cargoes

easing Europe’s strain

Crude and product shipments from the Middle East

are easing the strain on European refiners as Russian

volumes head East

POLICY AS the European Union closes in on a formal supplies. Meanwhile the latter has also been
embargo on purchases of Russian oil, concerns raising the number of cargoes it sends towards
WHAT: have turned to identifying possible replacements Europe through the Suez Canal.
Oil flows to Europe from for these cargoes. With the Middle East being The pipeline’s total daily average has risen to
the Middle East have shot home to the majority of the world’s proven oil 1.09mn bpd, all of which is destined for Europe,
up as Russian volumes reserves, the region’s top producers have been the highest volume since April 2020. Middle
head to Asia. called on to raise upstream output. Eastern countries – mainly Iraq – have also
While these calls have largely fallen on deaf been sending around 1.2mn bpd of cargoes to
WHY: ears, Saudi Arabia and Iraq have diverted Europe through Suez, giving a rough total of
Self-imposed restrictions existing production towards Europe, expand- 2.2mn bpd of crude trade. This would represent
on the purchase of ing inter-regional trade as Russian crude is a 90% increase compared to January, before the
Russian oil are shifting snapped up by China and India at discounted conflict in Ukraine began.
trade dynamics. rates on account of the former’s limited Meanwhile, Russian crude is going in the
market. opposite direction via ports in the Baltic and the
WHAT NEXT: Further downstream, a new refinery in Black Sea, supplying China and India at heav-
Refined product Kuwait is set to begin marketing new supplies ily discounted prices, in a major, though likely
shipments are likely of low and very low sulphur fuel oil (LSFO and temporary, shift in global oil trade dynamics.
to grow in the months VLSFO) ahead of next year’s ban on buying Rus- This is in sharp contrast to the gas market, with
ahead as the EU moves to sian refined products. European countries unable to secure enough
restrict Russian supplies LNG from Gulf suppliers to displace Russian
further downstream. SuMed supplies flows owing to existing contracts, mainly with
According to vessel-tracking data compiled Asian customers.
by Bloomberg, more than 1mn barrels per day However, in its effort to blacklist Moscow, a
(bpd) of Middle Eastern oil has been transported perhaps unanticipated consequence has been
via the SuMed pipeline – that runs across Egypt the increased carbon footprint of oil supplies to
from the Red Sea to Alexandria – so far in July, Europe, with Bloomberg quoting Lars Barstad,
nearly double the level of the same month last CEO of Frontline Management, as saying that
year. “tonne-miles” have at least doubled for Middle
Saudi Arabia accounts for the bulk of the Eastern crude, while those of Russian crude
piped volumes, with Iraq also increasing have tripled.

P6 www. NEWSBASE .com Week 29 22•July•2022