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Barrels

Japan’s biggest refiner has just imported two of Angola’s crude grades for the first time in three years in a move that non-traditional buyers of Angolan oil like Japan could replicate soon, due to the narrow spreads that now exist between Brent and Dubai, and to lower freight rates, Platts reported on Thursday, citing industry sources.

This month, JXTG Nippon Oil & Energy imported a very large crude carrier (VLCC) loaded with Angola’s Cabinda and Kissanje grades, the first Japanese import of the Cabinda variety since 2012 and the first such acquisition of Kissanje since 2014.

In May this year, Idemitsu imported 998,135 barrels of the Girassol crude grade, the first such import since April 2012, and the most recent Japanese import of Angolan oil before JXTG Nippon Oil & Energy’s delivery this month.

The narrowing quality spread between low-sulfur varieties and the Middle East’s high-sulfur grades has made low sulfur grades more appealing economically to non-traditional buyers of West African crudes in the East, sources told Platts.

“I don’t see [Japan] overly active in the market but there’s been an odd cargo here or there,” one West African crude trader told Platts, while another described JXTG’s latest acquisition as likely “opportunistic.”

Due to narrower spreads between the Brent and Dubai benchmarks, and to lower prices amid rising refining margins, West African oil grades have become more competitive over the past month, and spot demand has picked up.

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Asian demand for grades other than those from the Middle East has increased overall, not only for West African crude, with cargoes from the U.S., Latin America, and South America also managing to sell well, according to Platts.

Meanwhile, Angola’s oil exports are expected to hit a 13-month high of 1.7 million bpd in October, Reuters reported last month, citing a loading program. Angola’s September cargoes sold very well due to robust demand in Asia, lower Venezuelan exports, and rising refining margins.  

By Tsvetana Paraskova for Oilprice.com

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