Europe and Asia battle for oil supplies
At least 6 million barrels of oil loading in July are set to flow toward Europe, according to traders, which shipping analytics company Vortexa Ltd. estimates may be the highest volume since at least 2016.
It’s rare for cargoes from the UAE to be delivered to Europe, with the trade restarting this month for the first time since the pandemic upended markets two years ago.
The huge purchase comes at a critical time for Asian refiners, which are poised to rely more heavily on Middle Eastern cargoes after the widening of a key oil spread made crude from the North Sea and the US more expensive.
European demand may increase further in the coming months after leaders from the bloc agreed to pursue a partial ban on Russian oil due to the war in Ukraine.
The reduction in Chinese demand due to virus lockdowns and the record Russian flows heading to Asia have so far prevented a fierce bidding war to secure cargoes, traders said.
Refiners across Europe are running flat out to profit from surging diesel and gasoline prices, driving up crude demand and helping to boost the premium of global benchmark Brent to the Dubai grade.
Brent’s premium to Dubai swaps, also known as the Brent-Dubai exchange of futures for swaps, was at $12.40 a barrel as of 10:51 a.m. in Singapore, the widest gap in two months, according to PVM Oil Associates data.
European buyers purchased millions of barrels of Abu Dhabi grades, including flagship Murban, according to traders who buy and sell those varieties. Barrels from the UAE are likely to replace some Russian oil flows, they added.
Several key oil fields are scheduled to come back online in July, resolving some supply shortages for Europe. Daily North Sea Ekofisk loadings will jump to 232,000 barrels in July from only 40,000 a month earlier, while giant Johan Sverdrup loadings will also rise from a 21-month low in June.
