Tighter Market and Black Sea Risk Jolt North Sea Trade

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  • Exports of Brent, Forties, Oseberg, Ekofisk and Troll (BFOET) crudes that underpin the dated Brent price are scheduled to rise 7.6% month on month in September to 607,000 b/d.

  • West Texas Intermediate (WTI) Midland flows to Europe remained north of 1.3 million b/d in July, with large volumes delivered into the Brent settlement process at competitive prices.

  • A tighter physical market and higher risk premium in the Black Sea have given North Sea trade a nudge.

So far, prompt buying in the September cycle has been stronger than in August, reflecting in part a slightly tighter market and in part an uptick of arbitrage demand East of Suez.

The last round of Opec-plus curbs has tapered sour crude supply further and inflated Dubai-linked differentials.

With Brent trading at a discount to Dubai, the appeal of Atlantic basin cargoes in Asia has increased.

Meanwhile, a higher war-related risk factor in the Black Sea, notably on shipments of CPC Blend, has nudged buyers into action.

Prompt Bidding Firms Up

Prompt buying has awakened amid a fair bout of demand for Forties and Midland. On Aug. 9, TotalEnergies sold a couple of Forties cargoes to independent trader Mercuria at 95¢ per barrel in the Platts trading window. The French company has also scooped up several cargoes of Midland and is bidding for more.

A very large crude carrier of Forties is bound for Asia, most likely to South Korea, in the second half of September. “On the prompt, Total and [other companies] are bidding North Sea and WTI [crude], presumably because of the [Caspian Pipeline Consortium] risk factor that is pricing in to anything originating from Black Sea," a trader said.

Demand for Kazakhstan’s light, sour crude CPC Blend has inched up after the recent Ukrainian sea-drone attacks against Russian ships.

The weekly Brent CFD swaps between the Brent forward and dated Brent prices is now showing a steeper price backwardation. Wider time spreads should help work off inventories and keep the market well supplied. “The front spread keeps yo-yoing from +35¢ to +50¢, which says to me that [this] market is suitably supplied," a trader said.

North Sea Loadings for September and August 2023
(million bbl) SepAug
NorwayStandard CargoNo.Vol.No.Vol.
Total ('000 b/d)----607--564

Midland Defines the Price

WTI Midland now routinely exports more than twice the volumes of co-mingled BFOET exports to Europe. US sellers have been offering their Midland cargoes at competitive prices to carve out market share in the dated Brent market in Europe.

This aggressive selling contributed to the temporary dethroning of legacy BFOET grades like Brent and Forties as the cheapest in the dated Brent pricing pool. In June, Midland defined the dated Brent price in 17 of the 22 trading sessions during that month.

“Since Midland became part of the Brent it has played an active role in defining the value of the benchmark along with the other grades,” said Joel Hanley, global director crude and fuel oil markets at Platts.

The addition of large Midland volumes has boosted the North Sea benchmark, increasing liquidity in its underlying physical base and fleshing out the Brent assessment process that, some market participants thought, had become less representative of the fair value of light, sweet oil globally.

“In June, Midland tended to be among the most competitively priced, while in the current month Forties and Brent are currently defining the benchmark," Hanley said. Platts data shows that Midland has been the most competitive grade half of the time since its inclusion in dated Brent.

New Licensing Round

Meanwhile, the UK has launched a new upstream licensing round in the hope of breathing new life in a its mature North Sea petroleum province and bolster the country's energy security.

The North Sea Transition Authority said on Jul. 28 it is inviting companies to explore and potentially develop 898 blocks and partial blocks in the North Sea, which could lead to over 100 licenses being awarded by the end of June 2023.

The announcement has revived the ongoing controversy around the development of the Rosebank project west of Shetland, the UK's largest untapped oil and gas field, whose potential reserves are estimated to contain between 300 million and 500 million barrels of oil.

Norway’s Equinor, the principal developer of Rosebank, said in late July that it was nursing a "clear expectation" that the project would move forward, with approval expected soon and production to potentially start as early as 2026.


19-21700,00023,333 B0901Shell
03-05700,00023,333 F0901BP
06-08700,00023,333 F0902Equinor
10-12700,00023,333 F0903CNOOC
14-16700,00023,333 F0904Shell
17-19700,00023,333 F0905ENI
21-23700,00023,333 F0906BP
25-27700,00023,333 F0907Shell
28-30700,00023,333 F0908Glencore
09-11700,00023,333 20230901TotalEnergies
18-20700,00023,333 20230902ConocoPhillips/DNO/Equinor
27-29700,00023,333 20230903Equinor
31-02700,00023,333 C13172Shell
04-06700,00023,333 C13170TotalEnergies
07-09700,00023,333 C13177BP
09-11700,00023,333 C13171TotalEnergies
15-17700,00023,333 C13180BP
16-18700,00023,333 C13179ENI
22-24700,00023,333 C13174ConocoPhillips
24-26700,00023,333 C13176BP
26-28700,00023,333 C13178ENI
28-30700,00023,333 C13173Shell
29-01700,00023,333 C13175ConocoPhillips
13-15700,00023,333 20230901Equinor
21-23700,00023,333 20230902ConocoPhillips/Equinor
29-01700,00023,333 20230903Okea/PGNiG/Shell
Johan Sverdrup     
31-02750,00025,000 20230930Aker BP
01-032,000,00066,667 20230931Equinor
03-052,000,00066,667 20230932Equinor
06-081,000,00033,333 20230933Aker BP
07-09650,00021,667 20230934TotalEnergies
08-10750,00025,000 20230935Aker BP
10-12650,00021,667 20230936TotalEnergies
11-132,000,00066,667 20230937Equinor
13-15700,00023,333 20230938Aker BP
14-16700,00023,333 20230939Aker BP
15-172,000,00066,667 20230940Equinor
17-19700,00023,333 20230941Aker BP
19-21650,00021,667 20230942TotalEnergies
20-222,000,00066,667 20230943Equinor
22-242,000,00066,667 20230944Equinor
24-26750,00025,000 20230945Aker BP
26-28600,00020,000 20230946Equinor
27-29700,00023,333 20230947Aker BP
28-30750,00025,000 20230948Aker BP
29-012,000,00066,667 20230949Equinor
Total BFOET*18,200,000606,66726 cargoes----
Total Johan Sverdrup23,350,000778,33320 cargoes----
Total BFOET Plus Johan Sverdrup27,300,000910,00046 cargoes----

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