Page 6 - FSUOGM Week 30 2022

FSUOGM COMMENTARY FSUOGM

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.

EUROPE AS the European Union closes in on a formal Bloomberg, more than 1mn barrels per day
embargo on purchases of Russian oil, concerns (bpd) of Middle Eastern oil has been transport-
WHAT: have turned to identifying possible replacements ed via the SuMed pipeline – that runs across
Oil flows to Europe from for these cargoes. With the Middle East being Egypt from the Red Sea to Alexandria – so
the Middle East have shot home to the majority of the world’s proven oil far in July, nearly double the level of the same
up as Russian volumes reserves, the region’s top producers have been month last year.
head to Asia. called on to raise upstream output. Saudi Arabia accounts for the bulk of the
While these calls have largely fallen on deaf piped volumes, with Iraq also increasing sup-
WHY: ears, Saudi Arabia and Iraq have diverted exist- plies. Meanwhile the latter has also been raising
Self-imposed restrictions ing production towards Europe, expanding the number of cargoes it sends towards Europe
on the purchase of inter-regional trade as Russian crude is snapped through the Suez Canal.
Russian oil are shifting up by China and India at discounted rates on The pipeline’s total daily average has risen to
trade dynamics. account of the former's limited market. 1.09mn bpd, all of which is destined for Europe,
Further downstream, a new refinery in the highest volume since April 2020. Middle
WHAT NEXT: Kuwait is set to begin marketing new supplies Eastern countries – mainly Iraq – have also been
Refined product of low and very low sulphur fuel oil (LSFO and sending around 1.2mn bpd of cargoes to Europe
shipments are likely VLSFO) ahead of next year’s ban on buying Rus- through Suez, giving a rough total of 2.2mn
to grow in the months sian refined products. bpd of crude trade. This would represent a 90%
ahead as the EU moves to increase compared to January, before the conflict
restrict Russian supplies SuMed supplies in Ukraine began.
further downstream. According to vessel-tracking data compiled by Meanwhile, Russian crude is going in the

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