• 5 minutes Mike Shellman's musings on "Cartoon of the Week"
  • 11 minutes Permian already crested the productivity bell curve - downward now to Tier 2 geological locations
  • 17 minutes WTI @ 67.50, charts show $62.50 next
  • 7 mins The Discount Airline Model Is Coming for Europe’s Railways
  • 19 hours Newspaper Editorials Across U.S. Rebuke Trump For Attacks On Press
  • 14 hours WTI @ 69.33 headed for $70s - $80s end of August
  • 6 hours Pakistan: "Heart" Of Terrorism and Global Threat
  • 18 hours Batteries Could Be a Small Dotcom-Style Bubble
  • 1 day Corporations Are Buying More Renewables Than Ever
  • 5 hours Saudi Fund Wants to Take Tesla Private?
  • 9 hours Venezuela set to raise gasoline prices to international levels.
  • 6 hours Scottish Battery ‘Breakthrough’ Could Charge Electric Cars In Seconds
  • 15 hours Starvation, horror in Venezuela
  • 5 hours Desperate Call or... Erdogan Says Turkey Will Boycott U.S. Electronics
  • 20 hours Don't Expect Too Much: Despite a Soaring Economy, America's Annual Pay Increase Isn't Budging
  • 21 hours France Will Close All Coal Fired Power Stations By 2021
Crude-By-Rail Could Save The Permian Boom

Crude-By-Rail Could Save The Permian Boom

Crude-by-Rail (CBR) has been a…

Shale Profits Remain Elusive

Shale Profits Remain Elusive

Despite higher oil prices, U.S…

European Oil Shipments To Asia Slump To 4-Year Low

Oil tanker

European crude oil shipments to Asia have dropped this month to a four-year low of 7.6 million barrels this month, Reuters trade flow information has revealed, as higher Brent prices force shut the arbitrage window.

The January figure so far is less than half the 17 million barrels that European producers shipped to Asia last year, with Asian refiners apparently more willing to buy the costlier Middle Eastern and Russian light crude grades, which yield more diesel fuel. Diesel fuel is currently more profitable in Asia, hence the refiners’ willingness to cough up more for light crude.

The European exporters are suffering the effects of a widening spread between Brent and Dubai, which swelled to over US$3 per barrel last November. At this level, Reuters notes, the arbitrage window is considered shut. That was the first time this had happened since June 2016.

Among the grades that have benefited the most in terms of price, are Russia’s Sokol, Sakhalin, and ESPO, as well as Abu Dhabi’s Murban, which is currently trading at a premium of US$0.23 to its official selling price.

It’s worth noting, however, that the widening of the Brent-Dubai spread was not solely the result of OPEC’s and Russia’s production cuts and the resulting tighter oil supply. In fact, the supply disruption resulting from the shutdown of the Forties pipeline system in December had a lot to do with the higher Brent price, even though the shutdown didn’t last long.

Related: The Biggest Year Yet For U.S. Shale

The supply outage caused by the pipeline shutdown combined with greater European demand for the North Sea light crude grades and higher tanker rates, which made Middle Eastern and Russian crude more appealing to Asian refiners.

China, as usual, also had an instrumental role to play in these price movements. As part of its anti-pollution drive, Asia’s biggest consumer of oil announced plans to switch from high-sulfur to low-sulfur diesel in industrial applications late in 2017. This has reinforced the demand for light crude grades, and European exporters have been unable to respond to it.

By Irina Slav for Oilprice.com



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News