Gamma-ray bursts are the most…
In its latest annual Electric Vehicle…
OPEC’s production cuts and the U.S. sanctions on Venezuela and Iran have been limiting the availability of heavy and sour crude grades to Europe, where prices for heavier grades have recently shot up amid an increasingly tightening market, crude traders tell S&P Global Platts.
The U.S. sanctions on Iran had already limited some of the heavy grade supply into Europe. Then with the new round of OPEC/non-OPEC cuts that began in January, Iraq’s Basra Light and Heavy—typically very popular among European refiners—have also been in short supply on the spot market in Europe as Iraq is diverting more barrels of Basra to the premium market for Middle Eastern producers: Asia.
“There are no destination-free Basrah cargoes at the moment coming to Europe for the end of February as they’re targeting Asia,” a crude trader told Platts.
To top off the sanctions on Iran and the OPEC cuts, the U.S. sanctions on Venezuela at the end of January further tightened the heavy crude market in Europe, and traders expect the market to tighten even more in the coming months.
The sanctions on Venezuela and on Iran, as well as OPEC’s cuts, have led to a huge imbalance between light sweet grades and heavy sour grades, especially in Europe, as Middle Eastern and other oil producers are targeting to keep their sales on the Asian market.
Due to tighter supply of medium and heavy sour crude oil, Middle Eastern benchmarks for sour crude grades traded higher than Brent Crude prices at the beginning of February in a rarely seen development in global oil prices.
In Europe, some sour crude grades, such as Russia’s Urals, have started to trade at premiums to sweeter crudes because of the limited sour and heavy crude availability, according to S&P Global Platts data.
“Urals is at positive numbers, Basrah is trading at dramatic premium to OSP and I don’t see why sour should soften, demand is there but there is not much available,” a trader told Platts.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.