Refineries Boost Gasoline, Diesel Output

Saudi Arabia’s new 400,000 b/d refinery and Iran’s 120,000 b/d condensate splitter will highlight the region’s refining capacity gains in 2019. New or repaired secondary units in Kuwait and the UAE will also boost transportation fuel output next year. This will translate to lower gasoline imports and higher diesel exports from the Middle East next year, adding pressure on both fuels’ spreads to crude globally

LPG to Stumble

In the second half of 2018, European crude imports will fall by over 400,000 b/d year-on-year in response to slowing regional throughput. In 2019, imports will rebound slightly to an average of 9.9 million b/d, but the origin of these inflows will shift significantly as U.S. and Russian volumes replace Middle Eastern and African crudes.
This month we have begun publishing regional data from our global crude trade flows modeling including history back to January 2016 and forecast through December 2019 (see accompanying excel dataset). In 2019, with shale production decelerating, we expect crude exports to rise to an average of 2.2 million b/d after registering an annual average in 2018 of 1.8 million b/d.

Upgrading Capacity Expands Quickly through 2019

In the second half of 2018, European crude imports will fall by over 400,000 b/d year-on-year in response to slowing regional throughput. In 2019, imports will rebound slightly to an average of 9.9 million b/d, but the origin of these inflows will shift significantly as U.S. and Russian volumes replace Middle Eastern and African crudes.
This month we have begun publishing regional data from our global crude trade flows modeling including history back to January 2016 and forecast through December 2019 (see accompanying excel dataset). In 2019, with shale production decelerating, we expect crude exports to rise to an average of 2.2 million b/d after registering an annual average in 2018 of 1.8 million b/d.

Imports from U.S. and Russia Surge in 2019

In the second half of 2018, European crude imports will fall by over 400,000 b/d year-on-year in response to slowing regional throughput. In 2019, imports will rebound slightly to an average of 9.9 million b/d, but the origin of these inflows will shift significantly as U.S. and Russian volumes replace Middle Eastern and African crudes.
This month we have begun publishing regional data from our global crude trade flows modeling including history back to January 2016 and forecast through December 2019 (see accompanying excel dataset). In 2019, with shale production decelerating, we expect crude exports to rise to an average of 2.2 million b/d after registering an annual average in 2018 of 1.8 million b/d.

Plenty of Crude Overshadowed by Iran

The supply demand fundamentals are weaker due to sluggish Chinese demand growth and ample sources of additional crude oil supply. These factors would normally weaken crude prices. Yet, we expect some price strength in the next 18 months as the partial loss of Iranian exports shakes the market. Increases in refining capacity and preparations for the IMO change will lift crude demand next year, also providing support to prices.

This month we have begun publishing regional data from our global crude trade flows modeling including history back to January 2016 and forecast through December 2019 (see accompanying excel dataset). In 2019, with shale production decelerating, we expect crude exports to rise to an average of 2.2 million b/d after registering an annual average in 2018 of 1.8 million b/d.

Iran Customers Explore their Options

Iran has begun insuring its own cargos bound for India and China. This will facilitate crude imports once U.S. sanctions hit in November. Rupee- and renminbi-riyal payment mechanisms are also on the table for New Delhi and Beijing. We expect India and China to continue to take almost 1.0 million b/d of crude oil from Iran under the sanctions, down from about 1.3 million b/d. We expect a larger reduction by Iran’s other customers, and still believe the overall impact will be a reduction in Iranian exports of about 1.1 million b/d,

Government Backs Off U.S. Crude Tariff Threat

The diesel import requirement in Brazil and Argentina, South America’s southern cone, will shrink by 30,000 b/d next year. Diesel demand is taking off in Brazil, but throughput will rise faster, causing the import requirement to shrink by as much as 60,000 b/d in the next twelve months. In Argentina, conversely, the import requirement will expand as demand remains flat and throughput declines.