Europe intensified its competition for oil with Asia after buying most of the UAE’s crude in at least six years as buyers look to replace Russian barrels and meet rising fuel demand.
At least 6 million barrels of oil shipments in July are expected to flow to Europe, according to traders, which shipping analysis firm Vortexa Ltd. has estimated. could be the highest volume since at least 2016. It is rare for cargo to be delivered to the region from the UAE, with trade resuming markets this month for the first time since the pandemic hit two years ago.
The huge purchase comes at a critical time for Asian refiners poised to rely more heavily on Middle Eastern cargoes after the widening of a key oil spread made North Sea and US crude more expensive. European demand could rise further in the coming months after bloc leaders agreed to pursue a partial ban on Russian oil due to the war in Ukraine.
The drop in Chinese demand due to virus lockdowns and record flows from Russia to Asia have so far averted a heated bidding war to secure cargo, traders said. Refiners across Europe are in full swing to take advantage of rising diesel and gasoline prices, spurring crude oil demand and helping to increase global benchmark Brent’s premium over Dubai grade.
Brent’s premium for 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 data from PVM Oil Associates.
According to traders who buy and sell these varieties, European buyers have bought millions of casks of Abu Dhabi cultivars, including the flagship Murban. UAE-made barrels are likely to replace some Russian oil streams, they added.
Several key oil fields are scheduled to come back online in July, easing some supply shortages in Europe. Daily Ekofisk shipments in the North Sea will rise to 232,000 barrels in July from just 40,000 a month earlier, while huge Johan Sverdrup shipments will also rise from a 21-month low in June.
https://www.independent.ie/business/world/oil-market-strains-as-europe-and-asia-battle-for-barrels-41705218.html The oil market is tight as Europe and Asia battle over barrels