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West Looks to Opec to Fill Russian Gaps

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Both the US and Europe have so far looked to Opec members to help replace the Russian oil they have shunned. But they are pushing the limits on this trade and may find additional replacement barrels harder to come by as tougher restrictions on Russian imports are implemented in the coming months amid dwindling Opec spare capacity. Mideast producers have been sending more heavy oil to the US and Europe, and, along with West Africa, more crude to Europe. This successful rerouting of flows, which includes India and China buying more Russian crude, has helped calm oil markets. Brent has sunk to nearly a six-month low at under $100 per barrel, responding also to wobbly demand from high prices and the prospect of economic recession. But the summer lull could be short-lived. Deadlines looming on EU rules that will ban Russian oil imports and restrict shipping could create havoc beyond Opec’s control. US refiners have been replacing banned Russian intermediate fuels with feedstock from Opec members like Saudi Arabia, Iraq, Algeria, Kuwait and the United Arab Emirates, according to the US Energy Information Administration (EIA). US refiners bought nearly 300,000 barrels per day of heavy fuels from Opec members in May — the latest month for this EIA data — up from 45,000 b/d before the war. The same trend is visible in residual fuel oil, where not only Opec but also Latin American producers have stepped up supply to US refiners. EU refiners are buying more Mideast fuel oil. Meanwhile, some of Moscow's discounted fuel oil is moving to the Mideast, allowing countries there to export their own fuel at higher market prices. More US, West African and Mideast crude is flowing to Europe.

Topics:
Oil Trade, Crude Oil, Oil Products, Oil Tankers, Oil Pipelines, Ukraine Crisis
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