2024.11.19

Oil Prices Jump 3% on Norway Outage and Ukraine Escalation

Oil prices surged over 3% as Norway’s Johan Sverdrup oilfield halted production due to a power outage, tightening North Sea supply. Escalating tensions in the Russia-Ukraine war, including U.S. approval for Ukraine to strike deeper into Russia, added to the rise. Repairs at Kazakhstan’s Tengiz oilfield further constrained global supply, while weak Chinese refinery data and IEA forecasts capped long-term optimism.

[SLOW] Oil Market

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Saudi Oil Exports Reach Three-Month High Despite Lower Production

In September, Saudi Arabia's crude oil exports climbed to a three-month high of 5.751 million barrels per day (bpd), up from 5.671 million bpd in August, according to JODI data. Despite the rise in exports, production slightly declined to 8.975 million bpd. Crude throughput at refineries increased, while direct crude burning fell.

OPEC, including Saudi Arabia, faces challenges as it cut its 2024 global oil demand growth forecast, citing weakness in China and India. Saudi Arabia also reduced its December price for Arab Light crude to Asia by 50 cents per barrel.

[SLOW] Trade Flow _ Saudi Arabia To World Monthly Trade Flow 

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VLCC Rates Surge Amid Increased Activity and December Loadings

VLCC rates rose sharply, with Clarksons reporting an 8.4% jump to $39,600 per day, spurred by the opening of December loading dates in the Middle East and increased crude loadings in key regions. The Middle East to China route saw a notable 10% rate increase to $37,400 per day.

Jefferies highlighted that last week was the busiest for crude loadings since April, boosting tanker demand and spot rate potential. However, current rates are about $20,000 per day lower than last year due to reduced refinery throughput in China and lower vessel utilization.

Despite challenges, analysts see positive signs for the VLCC market, with firming rates and heightened activity following Bahri Week in Dubai.

[SLOW] Daily VLCC Market

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Sovcomflot Profits Drop Amid Tightening Sanctions

Sovcomflot's net profit fell to $505 million in the first nine months of 2024, down from $702 million in 2023, as Western sanctions intensified. Revenue declined to $1.5 billion, with operating costs rising to $312 million.

UK sanctions blacklisted 10 Sovcomflot tankers, including vessels responsible for transporting over $5 billion in oil. Cash reserves also dropped to $1.35 billion, while net debt increased to $116 million. Despite challenges, Sovcomflot remains committed to paying annual dividends based on adjusted profit.

 [SLOW] OFAC Santion Tanker List

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US Gulf Coast Refineries Hit Decades-High Output Amid Export Boom

US Gulf Coast refineries are operating at their busiest seasonal pace in over 30 years, processing 9.31 million barrels of crude daily, according to the EIA. November fuel exports are projected to reach 2.96 million barrels per day, the highest in seven years.

Surging demand from Mexico and Brazil drives this activity. Mexico faces delays at its Olmeca refinery, while Brazil’s diesel consumption hits a 24-year high amid sustained economic growth. Strong export demand and low inventories have boosted refining profit margins to their highest levels since August.

 [SLOW] Trade Flow - From US Gulf To World Trade Flow

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Sinopec and Aramco Begin $10 Billion Petrochemical Complex in China

Sinopec and Saudi Aramco have commenced construction of a $10 billion refinery and petrochemical complex in Fujian, China. The facility, located in Gulei industrial park, will include a 320,000 barrels-per-day refinery, a 1.5 million tpy ethylene plant, and a 2 million tpy paraxylene facility. It is expected to produce 5 million tons of petrochemical feedstock annually by 2030.

Aramco, seeking to expand its downstream business and strengthen ties with China, holds a 25% stake in the project, with Sinopec and Fujian Petrochemical holding the remaining shares. This venture adds to a series of large-scale investments in China’s petrochemical sector, as the nation aims for self-sufficiency.

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