Bloomberg: Supplies of sour, or high sulfur, crude oil in Europe will continue to be tight because of the loss of Iranian and Syrian exports and “strong” refining margins for fuel oil, according to JBC Energy GmbH. Bloomberg
By Sherry Su
Supplies of sour, or high sulfur, crude oil in Europe will continue to be tight because of the loss of Iranian and Syrian exports and “strong” refining margins for fuel oil, according to JBC Energy GmbH.
“Fuel oil is finding support in arbitrage to Asia,” and while exports of Urals crude from Russia may increase in June, “the continued loss of the bulk of Iranian and Syrian crude will keep the sour crude market tight in the region,” a JBC Energy team of analysts led by David Wech in Vienna said in a report today.
Russian Urals crude rose to a discount of 6 cents a barrel to Dated Brent today in the Mediterranean, the narrowest since Aug. 20, according to data compiled by Bloomberg. Urals briefly traded at a premium to Dated Brent during July and August last summer. June loading programs for Urals crude in the Black Sea and Baltic Sea will be issued later this month.
The recent strength in Urals crude came from “an impressive array of factors,” including higher fuel oil refining margins, a tight May loading schedule of Urals and European Union’s sanctions on Iranian crude, the report said. JBC also cited the continued unreliability of Iraqi Kirkuk crude and the return of an estimated 1.4 million barrels a day of European refining capacity from maintenance versus April.
These factors are “largely expected to remain in place,” though the high prices for sour feedstock are already weighing on European margins, JBC said.
