Can Mideast Sustain Higher Exports to EU?

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The looming EU embargo on Russian crude may not have significantly dented the continent’s intake of Urals yet. But Mideast crude flows to Europe are on the rise, and at least in the case of Saudi Arabia, they are set to grow, with refiners seeking to secure additional future supplies. Saudi crude exports to Europe topped 1 million barrels per day last month, their highest since March 2020, according to Kpler. Highlighting the strength of demand, the surge came despite Saudi Aramco setting record-high official formula prices for August-loading cargoes of Arab Light to the Mediterranean and Northwest Europe. Aramco is eyeing higher exports particularly to Eastern Europe under a long-term supply deal with Poland’s PKN Orlen. Other Mideast grades heading to Europe in bigger volumes include Iraq’s Basrah crude, which averaged 620,000 b/d over the past three months, according to Energy Intelligence data, up by around 200,000 b/d from the previous six-month average. In Aramco’s case, stronger European demand ahead of the Dec. 5 embargo appears to explain the trend. “It is more Saudi crude that seems to be the solution in the short term. But I think we will start to see more [Mideast] grades move west from November onwards,” says a European oil trader. Less clear is whether the increased flows from Iraq and elsewhere have essentially been displaced by cheap Russian barrels in Asia. Iraqi state marketer Somo insists that is not the case. But while Aramco’s allocations to Asia so far remain unaffected, Basrah exports to India have fallen.

Opec-Plus Supply , Sanctions, Oil Demand, Oil Spot Markets, Crude Oil, Ukraine Crisis
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