The determinant of China’s crude oil import preference has mainly been based on the pricing discount they can achieve as Russian barrels remained cost-competitive. China’s crude import has been largely driven by prices on the delivered basis, which explains the significant jump in volumes from Russia and other unconventional exporters. Imports from others including OPEC and non-OPEC countries in the Middle East, West Africa, North and South Americas moved sideways since 2021 (grey area in the left graph), with this volume further sliding in 2024 amid pressured refining margins and runs reported by state-owned oil majors. Geo-events and ...
West to East Russian Crude & Fuel Oil
Nov. 8, 2024
West-to-East cargo flow, which has been dominated by Russian exports to the East, simultaneously trending lower in 2024 for both crude and refined products. On the crude side, exports to Northern Europe saw a notable decline since Russia’s invasion in Ukraine, while Far East and India rapidly increased their intake of Russian crude since then. These export levels expanded further after the Price Cap being adopted; however, exports to the Far East (predominantly exports from the Baltic and Black Sea to China), significantly retreated since the Red Sea disruption. Despite Houthi promises not to attack Russian and Chinese ships ...
Hormuz Strait CPP Analysis
Nov. 1, 2024
In a Hormuz Strait closure scenario, the CPP market would be materially affected as there are no logistically viable options for CPP tankers to bypass. Therefore, we anticipate all CPP exports will be diverted to other supply regions in the “Strait Disruption” scenario, adding a net of 62 MR2 demand equivalents. Based on our AIS tracking data, we have captured on average 2.47 million b/d of clean refined products sailing from the Arabian Gulf in 2024 through the Hormuz strait. Unlike crude or NGL exports, there is no operational pipeline in the Middle East to bypass the Hormuz ...
CPP Market Volatility in PADD 3
Sept. 27, 2024
Hurricanes and other severe weather disruptions could halt offshore crude production as well as refinery runs, ultimately impacting tanker demand for both oil imports and exports. Hurricanes serve as one of the key downside risks for US Gulf refineries to shut or reduce their runs, tightening US’s product balances and limiting available exports. In tandem with the seasonal maintenance in Spring and Fall, we saw PADD 3 refinery utilization sharply reduced month-over-month by 11.5% in Sep 2017 (Hurricane Harvey), 3.1% in Aug 2020 (Hurricane Laura) and 6.9% in Sep 2021 (Hurricane Ida). However, despite notable storms ...
USG VLCC Terminal Projects: A Game Changer
Sept. 13, 2024
The need for enhanced crude export capabilities has been identified amid rising production and exports out of the US Gulf, with several VLCC Terminal projects scheduled to take place. According to US EIA, US crude production is expected to rapidly increase from 12.5 mil b/d in 2023 to 14.4 mil b/d in 2030, raising the US’s crude balance above the 4.0 mil b/d mark and pushing over 6.5 million b/d of crude to be exported from the US Gulf region. Currently, the Louisiana Offshore Oil Port (LOOP) is the only US ...
