The spread between Dubai and Brent, also known as the EFS, continued to narrow with demand for Middle Eastern (ME) crude remaining strong and with reports of Indian refiners looking to scale down purchases of Russia’s ESPO blend due to high freight rates. This is likely to raise the demand for spot Murban crude oil cargoes in the coming weeks.
Timespreads for Dubai swaps softened in the latter part of the week (September 19-25th) following the broader fall in benchmarks as economic concerns took precedence despite the market remaining tightly supplied.
Weekly crude oil exports from the Middle East and North Africa were lower at 117.6 million bbl and 17 million bbl, respectively.
ME rude found competition from arbitrage barrels, including those linked to WTI, on the back of the healthy spreads which encourage arbitrage flows.
The OPEC+ was reported to have produced lesser than the target in August with the deficit increasing from 2.89 million bpd to 3.58 million bpd, underscoring the challenge faced by some member nations to increase supplies.
The next OPEC+ meeting is scheduled for October 5, 2022.
India's IOC was reported to be planning maintenance of a few units over the course of the next month. The turnaround includes shutdown of nearly 150,000 bpd of crude distillation capacity, a hydrocracker, diesel desulphurization and naphtha cracker.
The Crude Distillation Unit (CDU) maintenance is expected to last a month beginning Oct 26th. Iraq announced the commencement of trial operations at the Karbala refinery south of Baghdad. The refinery is reported to have a nameplate capacity of 140,000 bpd.
In other refining news, the refining sector in France has come under pressure with fires and strikes knocking out significant capacity. Strike action has reportedly stopped dispatch of refined products from three Total Energies' refineries and a fuel storage depot, Reuters reported citing a CGT union official.
The company has taken steps to ensure adequate supplies were made available to customers in anticipation of the strike. The union has planned to strike till 29th September, Reuters reported.
With winter approaching and energy supplies to Europe being critically monitored, any further deterioration in the situation could add to the challenges for policymakers.
(Writing by Sudharsan Sarathy; editing by Seban Scaria email@example.com)