Oil sinks as manufacturing data feeds global economy worries - Reuters:
Oil prices fell on Tuesday, with U.S. crude futures down 2% after manufacturing data raised concerns about a weakening global economy, while the U.S.-China trade dispute continued to drag on investor sentiment.
U.S. West Texas Intermediate (WTI) crude CLc1 futures fell $1.16, or 2.1%, to settle at $53.94 a barrel. The session low was $52.84 a barrel, the lowest since Aug. 9.
Brent crude LCOc1 futures lost 40 cents, or 0.7%, to settle at $58.26 a barrel. It sank as low as $57.23 a barrel, also the weakest since Aug. 9.
Prices extended losses following data that showed U.S. manufacturing activity in August contracted for the first time in three years. Earlier, separate data showed euro zone manufacturing activity contracted for a seventh month in August.
Tuesday, 3 September 2019
#Saudi Aramco to Finalize Bank Selections for IPO This Week - Bloomberg
Saudi Aramco to Finalize Bank Selections for IPO This Week - Bloomberg:
Saudi Aramco aims to select underwriters for its initial public offering as soon as this week, as the state energy giant accelerates preparations for the world’s biggest share sale, people with knowledge of the matter said.
Global investment banks are finishing up a week of pitches that started last Tuesday in Dhahran, the eastern Saudi city where Aramco is based, according to the people. Some firms seeking a role on the deal made presentations in Dubai or London, the people said. Aramco plans to tell banks later this week or early next week whether they got a role on the offering, the people said, asking not to be identified because the information is private.
Aramco is expected to choose about four or five banks to lead the IPO marketing as joint global coordinators, while a larger number will work on the deal in more junior capacities, the people said. It is considering selling shares on the Saudi stock exchange as soon as late this year or early next year, with a potential international listing at a later date, the people said.
Saudi Aramco aims to select underwriters for its initial public offering as soon as this week, as the state energy giant accelerates preparations for the world’s biggest share sale, people with knowledge of the matter said.
Global investment banks are finishing up a week of pitches that started last Tuesday in Dhahran, the eastern Saudi city where Aramco is based, according to the people. Some firms seeking a role on the deal made presentations in Dubai or London, the people said. Aramco plans to tell banks later this week or early next week whether they got a role on the offering, the people said, asking not to be identified because the information is private.
Aramco is expected to choose about four or five banks to lead the IPO marketing as joint global coordinators, while a larger number will work on the deal in more junior capacities, the people said. It is considering selling shares on the Saudi stock exchange as soon as late this year or early next year, with a potential international listing at a later date, the people said.
Global Downturn Is Starting to Gain a Foothold in the Gulf - Bloomberg
Global Downturn Is Starting to Gain a Foothold in the Gulf - Bloomberg:
Sentiment soured further in the United Arab Emirates as a gauge of business conditions in the second-largest Gulf economy slumped to an eight-year low.
In an echo of disputes that have roiled global trade, sales to foreign customers posted a “weaker upturn” and new orders stagnated in the U.A.E. in August, according to IHS Markit. Its Purchasing Managers’ Index dropped to 51.6 from 55.1 in July, declining for a third month and edging close to the threshold of 50 that separates contraction from growth.
Fears of a global downturn are deepening as signs of a manufacturing slump have emerged from Europe to Asia. Domestic competitive pressures are compounding the outlook for the U.A.E., a federation of seven emirates that includes oil-rich Abu Dhabi and tourism and trade hub Dubai.
Sentiment soured further in the United Arab Emirates as a gauge of business conditions in the second-largest Gulf economy slumped to an eight-year low.
In an echo of disputes that have roiled global trade, sales to foreign customers posted a “weaker upturn” and new orders stagnated in the U.A.E. in August, according to IHS Markit. Its Purchasing Managers’ Index dropped to 51.6 from 55.1 in July, declining for a third month and edging close to the threshold of 50 that separates contraction from growth.
Fears of a global downturn are deepening as signs of a manufacturing slump have emerged from Europe to Asia. Domestic competitive pressures are compounding the outlook for the U.A.E., a federation of seven emirates that includes oil-rich Abu Dhabi and tourism and trade hub Dubai.
U.S. LNG grabs 10% market share as January-August exports equal 2018 volumes - Reuters
U.S. LNG grabs 10% market share as January-August exports equal 2018 volumes - Reuters:
U.S. exports of liquefied natural gas (LNG), negligible just three years ago, now amount to 10% of the global market and at 22 million tonnes so far this year are equal to the total volumes pumped out in 2018, Refinitiv data showed on Tuesday.
The data, comprised of tracked individual journeys made by LNG tankers from supply source to destination, also showed LNG production hit an all-time high last month of 31 million tonnes.
As global volumes grow, Qatar, for years the world’s largest LNG supplier, lost market share to Australia, which exported more LNG than any other country in the past two months.
U.S. exports of liquefied natural gas (LNG), negligible just three years ago, now amount to 10% of the global market and at 22 million tonnes so far this year are equal to the total volumes pumped out in 2018, Refinitiv data showed on Tuesday.
The data, comprised of tracked individual journeys made by LNG tankers from supply source to destination, also showed LNG production hit an all-time high last month of 31 million tonnes.
As global volumes grow, Qatar, for years the world’s largest LNG supplier, lost market share to Australia, which exported more LNG than any other country in the past two months.
Column: Hedge funds cautious on oil, wait for economy - Reuters
Column: Hedge funds cautious on oil, wait for economy - Reuters:
Hedge funds are becoming slightly more pessimistic about the outlook for oil and the economy, though position changes remain small owing to the holiday season in North America and Europe.
Hedge funds and other money managers were small net sellers of petroleum futures and options last week for the third time in the last four weeks, according to an analysis of data published by regulators and exchanges.
Fund managers sold a total of 26 million barrels in the six most important futures and options contracts, reducing their net long position to 525 million barrels in the week to Aug. 27.
Hedge funds are becoming slightly more pessimistic about the outlook for oil and the economy, though position changes remain small owing to the holiday season in North America and Europe.
Hedge funds and other money managers were small net sellers of petroleum futures and options last week for the third time in the last four weeks, according to an analysis of data published by regulators and exchanges.
Fund managers sold a total of 26 million barrels in the six most important futures and options contracts, reducing their net long position to 525 million barrels in the week to Aug. 27.
Oil drops more than 2% as trade war rumbles and output swells - Reuters
Oil drops more than 2% as trade war rumbles and output swells - Reuters:
Oil prices fell more than 2% on Tuesday, weighed down by rising OPEC and Russian oil output as well as the protracted U.S.-China trade dispute that has dragged on the global economy.
U.S. crude CLc1 was down $1.80, or 3.27%, at $53.30 a barrel by 1305 GMT and Brent crude LCOc1 was down $1.28 or 2.18% at $57.38.
“The gloomy mood has mainly been down to the U.S.-China stand-off in trade talks as the two countries continue the tit-for-tat measures of implementing import tariffs on each other’s goods,” said Tamas Varga of oil brokerage PVM. “This is the single most important flat price driver of late.”
Oil prices fell more than 2% on Tuesday, weighed down by rising OPEC and Russian oil output as well as the protracted U.S.-China trade dispute that has dragged on the global economy.
U.S. crude CLc1 was down $1.80, or 3.27%, at $53.30 a barrel by 1305 GMT and Brent crude LCOc1 was down $1.28 or 2.18% at $57.38.
“The gloomy mood has mainly been down to the U.S.-China stand-off in trade talks as the two countries continue the tit-for-tat measures of implementing import tariffs on each other’s goods,” said Tamas Varga of oil brokerage PVM. “This is the single most important flat price driver of late.”
#Dubai economy to grow by 2.4% in 2019 supported by economic activity: S&P | ZAWYA MENA Edition
Dubai economy to grow by 2.4% in 2019 supported by economic activity: S&P | ZAWYA MENA Edition:
Economic activity in Dubai has weakened in recent years, with the GDP growing last year at its slowest pace in nine years. However, increased economic activity triggered by Expo 2020 Dubai and traditional growth engines could pump up the emirate’s growth over 2019-2022.
S&P Global Ratings on Tuesday said that it expects a marginal pick-up in economic growth of the emirate to 2.4 percent in 2019, with support coming largely from the construction and real estate sectors. The economy grew by 1.94 percent in 2018, its slowest pace since a 2009 contraction when the economy was in the midst of a debt crisis.
"We expect the completion of Expo 2020-related infrastructure projects and additional residential housing supply to enter the market from existing projects this year," the report noted.
Economic activity in Dubai has weakened in recent years, with the GDP growing last year at its slowest pace in nine years. However, increased economic activity triggered by Expo 2020 Dubai and traditional growth engines could pump up the emirate’s growth over 2019-2022.
S&P Global Ratings on Tuesday said that it expects a marginal pick-up in economic growth of the emirate to 2.4 percent in 2019, with support coming largely from the construction and real estate sectors. The economy grew by 1.94 percent in 2018, its slowest pace since a 2009 contraction when the economy was in the midst of a debt crisis.
"We expect the completion of Expo 2020-related infrastructure projects and additional residential housing supply to enter the market from existing projects this year," the report noted.
MIDEAST STOCKS-Real estate firms hurt# Dubai; #Qatar extends gains - Reuters
MIDEAST STOCKS-Real estate firms hurt Dubai; Qatar extends gains - Reuters:
Dubai's stock market reversed course to
end lower on Tuesday, hurt by its property shares, while
blue-chip lenders helped Qatar outperform major markets in the
region.
In Dubai, the index fell 0.5%, with all its real
estate stocks tumbling. Emaar Properties, the
emirate's largest listed developer, lost 2.3%, while its units
Emaar Malls and Emaar Development were
both 2.1% and 2.2% respectively.
Heavy oversupply in the property market, an important sector
of Dubai's economy, has seen residential prices slide by at
least a quarter since mid-2014.
Dubai's stock market reversed course to
end lower on Tuesday, hurt by its property shares, while
blue-chip lenders helped Qatar outperform major markets in the
region.
In Dubai, the index fell 0.5%, with all its real
estate stocks tumbling. Emaar Properties, the
emirate's largest listed developer, lost 2.3%, while its units
Emaar Malls and Emaar Development were
both 2.1% and 2.2% respectively.
Heavy oversupply in the property market, an important sector
of Dubai's economy, has seen residential prices slide by at
least a quarter since mid-2014.
#Saudi transport minister appointed to Aramco board; energy minister Falih loses seat on board | ZAWYA MENA Edition
Saudi transport minister appointed to Aramco board; energy minister Falih loses seat on board | ZAWYA MENA Edition:
Saudi Arabian Energy Minister Khalid al-Falih is no longer on the board of directors of state oil giant Aramco, according to the company's website.
Saudi Arabia's transport minister, Nabeel al-Amudi, has been appointed to the board of Aramco, state news agency SPA reported on Tuesday.
The move follows the appointment of Yasir al-Rumayyan, head of the kingdom’s sovereign wealth fund, known as the PIF, as chairman of Aramco, replacing Falih.
Saudi Arabian Energy Minister Khalid al-Falih is no longer on the board of directors of state oil giant Aramco, according to the company's website.
Saudi Arabia's transport minister, Nabeel al-Amudi, has been appointed to the board of Aramco, state news agency SPA reported on Tuesday.
The move follows the appointment of Yasir al-Rumayyan, head of the kingdom’s sovereign wealth fund, known as the PIF, as chairman of Aramco, replacing Falih.
#Saudi wealth fund grabs the controls of Aramco IPO | Financial Times
Saudi wealth fund grabs the controls of Aramco IPO | Financial Times:
When Saudi Arabia’s ambitious crown prince Mohammed bin Salman wanted something done, his energy minister was often on hand. Khalid al-Falih was tasked with stabilising the oil market after the 2014 crash and helping to diversify the kingdom’s economy.
But the veteran adviser has now been eased aside in delivering a project on which many of Prince Mohammed’s broader ambitions for Saudi Arabia hinge: the long-awaited flotation of Saudi Aramco. On Monday it emerged that Yasir al-Rumayyan, head of the Public Investment Fund, the country’s sovereign wealth fund, had replaced Mr Falih as chairman of the kingdom’s state oil giant.
Installing Mr Rumayyan, a former local investment banker, as chairman of Saudi Aramco underlines the PIF’s growing muscle. A once sleepy fund, PIF has already been charged with developing a number of ambitious multibillion-dollar mega projects in the kingdom, forging new industries from scratch and snapping up stakes in companies including ride-hailing app Uber.
When Saudi Arabia’s ambitious crown prince Mohammed bin Salman wanted something done, his energy minister was often on hand. Khalid al-Falih was tasked with stabilising the oil market after the 2014 crash and helping to diversify the kingdom’s economy.
But the veteran adviser has now been eased aside in delivering a project on which many of Prince Mohammed’s broader ambitions for Saudi Arabia hinge: the long-awaited flotation of Saudi Aramco. On Monday it emerged that Yasir al-Rumayyan, head of the Public Investment Fund, the country’s sovereign wealth fund, had replaced Mr Falih as chairman of the kingdom’s state oil giant.
Installing Mr Rumayyan, a former local investment banker, as chairman of Saudi Aramco underlines the PIF’s growing muscle. A once sleepy fund, PIF has already been charged with developing a number of ambitious multibillion-dollar mega projects in the kingdom, forging new industries from scratch and snapping up stakes in companies including ride-hailing app Uber.
Saudis Replace Aramco Chair Khalid Al-Falih With Wealth Fund Boss Yasir Al-Rumayyan Before IPO - Bloomberg
Saudis Replace Aramco Chair Khalid Al-Falih With Wealth Fund Boss Yasir Al-Rumayyan Before IPO - Bloomberg:
Saudi Arabia removed Energy Minister Khalid Al-Falih from his position as Chairman of Saudi Aramco, the second time his role has been scaled back in less than a week, as the government prepares to sell shares in the state-owned oil company. He will be replaced by Yasir Al-Rumayyan, head of the sovereign wealth fund. Matthew Martin reports on "Bloomberg Daybreak: Europe." (Source: Bloomberg)
Saudi Arabia removed Energy Minister Khalid Al-Falih from his position as Chairman of Saudi Aramco, the second time his role has been scaled back in less than a week, as the government prepares to sell shares in the state-owned oil company. He will be replaced by Yasir Al-Rumayyan, head of the sovereign wealth fund. Matthew Martin reports on "Bloomberg Daybreak: Europe." (Source: Bloomberg)
Khatija Haque, head of MENA Research at Emirates NBD, on #Saudi Aramco's IPO Plan, Economy - Bloomberg
Khatija Haque, head of MENA Research at Emirates NBD, on Saudi Aramco's IPO Plan, Economy - Bloomberg:
Khatija Haque, head of Middle East and North Africa Research at Emirates NBD, talks about the prospects for Saudi Aramco's initial public offering and the implications for the kingdom's economy. Saudi Arabia’s stock exchange says it hasn’t yet received a filing for an IPO by the state oil giant. Haque speaks with Yousef Gamal El-Din and Tracy Alloway on "Bloomberg Daybreak: Middle East." (Source: Bloomberg)
Khatija Haque, head of Middle East and North Africa Research at Emirates NBD, talks about the prospects for Saudi Aramco's initial public offering and the implications for the kingdom's economy. Saudi Arabia’s stock exchange says it hasn’t yet received a filing for an IPO by the state oil giant. Haque speaks with Yousef Gamal El-Din and Tracy Alloway on "Bloomberg Daybreak: Middle East." (Source: Bloomberg)
#UAE Business Conditions Hit 8-Year Low Amid Tough Competition - Bloomberg
U.A.E. Business Conditions Hit 8-Year Low Amid Tough Competition - Bloomberg:
Business conditions in the United Arab Emirates fell to an eight-year low in August as competitive pressures bit.
IHS Markit’s Purchasing Managers’ Index dropped to 51.6 from 55 a year earlier and 55.1 in July, edging close to the threshold of 50 that separates contraction from growth.
Heightened market competition continued to weigh on growth, forcing companies to cut prices by the most since April, according to panelists surveyed in the monthly release. Activity in the non-oil economy increased “at a notably softer rate” compared to July, with weaker demand curbing the expansion, the report said. Even so, customer spending remained strong in the second-largest Gulf economy.
Business conditions in the United Arab Emirates fell to an eight-year low in August as competitive pressures bit.
IHS Markit’s Purchasing Managers’ Index dropped to 51.6 from 55 a year earlier and 55.1 in July, edging close to the threshold of 50 that separates contraction from growth.
Heightened market competition continued to weigh on growth, forcing companies to cut prices by the most since April, according to panelists surveyed in the monthly release. Activity in the non-oil economy increased “at a notably softer rate” compared to July, with weaker demand curbing the expansion, the report said. Even so, customer spending remained strong in the second-largest Gulf economy.
Haven Fever Dims Oil Pain and Fuels Record Month for Gulf Bonds - Bloomberg
Haven Fever Dims Oil Pain and Fuels Record Month for Gulf Bonds - Bloomberg:
Never mind the renewed slump in oil, the global hunt for high-grade dollar debt made August the best month on record for Gulf bonds.
Staring down almost $17 trillion of negative-yielding bonds worldwide, money managers were drawn like never before to a region whose average sovereign credit rating is A+, on par with China, Chile and Ireland. Bonds from all six of the Gulf Cooperation Council nations included in a Bloomberg Barclays index advanced in August, with securities from Saudi Arabia and Qatar leading the pack.
There’s a “flight-to-quality trade within emerging markets,” said Mohammed Elmi, a London-based money manager at Federated Investors U.K., adding that the rally in U.S. Treasuries has provided a tailwind to high-grade Gulf sovereign debt. “It is only natural to trade up the quality curve during these volatile times.”
Never mind the renewed slump in oil, the global hunt for high-grade dollar debt made August the best month on record for Gulf bonds.
Staring down almost $17 trillion of negative-yielding bonds worldwide, money managers were drawn like never before to a region whose average sovereign credit rating is A+, on par with China, Chile and Ireland. Bonds from all six of the Gulf Cooperation Council nations included in a Bloomberg Barclays index advanced in August, with securities from Saudi Arabia and Qatar leading the pack.
There’s a “flight-to-quality trade within emerging markets,” said Mohammed Elmi, a London-based money manager at Federated Investors U.K., adding that the rally in U.S. Treasuries has provided a tailwind to high-grade Gulf sovereign debt. “It is only natural to trade up the quality curve during these volatile times.”
Saudi non-oil private sector growth edges up in August: PMI - Reuters
Saudi non-oil private sector growth edges up in August: PMI - Reuters:
Growth in Saudi Arabia’s non-oil private sector improved slightly in August as output increased, backed by stronger domestic demand, a survey showed on Tuesday.
The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) went up to 57.0 in August from a five-month low of 56.6 in July. Any reading above the 50 mark indicates expansion.
Growth has picked up this year after suffering in 2018 because of increases in fuel prices and the introduction of a 5% value-added tax.
Growth in Saudi Arabia’s non-oil private sector improved slightly in August as output increased, backed by stronger domestic demand, a survey showed on Tuesday.
The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) went up to 57.0 in August from a five-month low of 56.6 in July. Any reading above the 50 mark indicates expansion.
Growth has picked up this year after suffering in 2018 because of increases in fuel prices and the introduction of a 5% value-added tax.
UPDATE 1-Emaar Properties hires banks for dollar Islamic bonds - Reuters
UPDATE 1-Emaar Properties hires banks for dollar Islamic bonds - Reuters:
Dubai’s largest listed developer, Emaar Properties, has hired banks to arrange the potential issuance of dollar Islamic bonds, re-entering international debt markets after it put previous bond plans on hold.
Emaar, which is 29.2% owned by state fund Investment Corporation of Dubai, is looking to issue 10-year sukuk, or Islamic bonds, after meeting investors in Asia and London from Sept. 6, according to a document seen by Reuters issued by one of the banks leading the deal.
The planned deal, part of a $2 billion debt raising programme, comes amid tough conditions in the Dubai property market, where oversupply has seen residential prices slide by at least a quarter since mid-2014.
Dubai’s largest listed developer, Emaar Properties, has hired banks to arrange the potential issuance of dollar Islamic bonds, re-entering international debt markets after it put previous bond plans on hold.
Emaar, which is 29.2% owned by state fund Investment Corporation of Dubai, is looking to issue 10-year sukuk, or Islamic bonds, after meeting investors in Asia and London from Sept. 6, according to a document seen by Reuters issued by one of the banks leading the deal.
The planned deal, part of a $2 billion debt raising programme, comes amid tough conditions in the Dubai property market, where oversupply has seen residential prices slide by at least a quarter since mid-2014.
MIDEAST STOCKS- #Dubai extends rally as Emirates NBD gains, other markets mixed - Reuters
MIDEAST STOCKS-Dubai extends rally as Emirates NBD gains, other markets mixed - Reuters:
The Dubai stockmarket continued its rally in early trade on Tuesday after lender Emirates NBD rose sharply, although elsewhere in the gulf other major indices were mixed.
Dubai’s index rose 0.7% extending gains in the previous session when it hit its biggest one-day rise in three and half years, boosted by lender Emirates NBD, which increased a further 4.9%, a day after it closed at a 12-year high.
The bank raised foreign ownership limit to 20% from 5% with effect from Monday and also announced its intention to raise that limit to 40% in future.
The Dubai stockmarket continued its rally in early trade on Tuesday after lender Emirates NBD rose sharply, although elsewhere in the gulf other major indices were mixed.
Dubai’s index rose 0.7% extending gains in the previous session when it hit its biggest one-day rise in three and half years, boosted by lender Emirates NBD, which increased a further 4.9%, a day after it closed at a 12-year high.
The bank raised foreign ownership limit to 20% from 5% with effect from Monday and also announced its intention to raise that limit to 40% in future.
Oil prices fall as market eyes trade war, awaits stocks data - Reuters
Oil prices fall as market eyes trade war, awaits stocks data - Reuters:
Oil prices fell on Tuesday as the ongoing U.S.-China trade war cast a pall over markets, with soft South Korean data adding to concerns over emerging markets and a rise in OPEC output.
U.S. crude CLc1 was down 26 cents, or 0.5%, at $54.84 a barrel by 0644 GMT, while Brent LCOc1 was down 6 cents at $58.60 a barrel.
The United States this week imposed 15% tariffs on a variety of Chinese goods and China began to impose new duties on a $75 billion target list, deepening the trade war that has rumbled on for more than a year.
Oil prices fell on Tuesday as the ongoing U.S.-China trade war cast a pall over markets, with soft South Korean data adding to concerns over emerging markets and a rise in OPEC output.
U.S. crude CLc1 was down 26 cents, or 0.5%, at $54.84 a barrel by 0644 GMT, while Brent LCOc1 was down 6 cents at $58.60 a barrel.
The United States this week imposed 15% tariffs on a variety of Chinese goods and China began to impose new duties on a $75 billion target list, deepening the trade war that has rumbled on for more than a year.
Oil veteran Gary Ross lifts lid on the art of price forecasts | Financial Times
Oil veteran Gary Ross lifts lid on the art of price forecasts | Financial Times:
When Gary Ross heard reports of an oil tanker accident off the coast of Alaska, he picked up the phone.
“I call the pilot of the port of Valdez and basically asked him, ‘Can you tell me what’s going on?’,” the Brooklyn-born founder of Pira Energy says of the Exxon Valdez disaster.
“He said, ‘There’s so much oil, I’ve never seen anything like it in my life — miles and miles of oil!’,” said Mr Ross, mimicking the panicked voice on the other end of the line.
When Gary Ross heard reports of an oil tanker accident off the coast of Alaska, he picked up the phone.
“I call the pilot of the port of Valdez and basically asked him, ‘Can you tell me what’s going on?’,” the Brooklyn-born founder of Pira Energy says of the Exxon Valdez disaster.
“He said, ‘There’s so much oil, I’ve never seen anything like it in my life — miles and miles of oil!’,” said Mr Ross, mimicking the panicked voice on the other end of the line.
Twin-track for oil producers will shake up Iran and Iraq | Financial Times
Twin-track for oil producers will shake up Iran and Iraq | Financial Times:
Heightening tensions in the Strait of Hormuz belie a deeper shift taking place in the Middle East. A twin-track oil industry is taking root, with long-term implications for the region.
Historically, the region’s producers have been comforted by the fact that their medium-heavy crudes have been a regular staple of refinery diets, particularly in India and China — the future axis of demand growth out to 2040.
But Asian refiners are getting used to a new reality: living in a market awash with crude of global origins. Spot west African crudes — previously destined for Europe but displaced by surging US exports — have found their way to China. US grades are becoming a more regular staple of Asian refiners’ diet, while Russia’s growing oil pipeline exports via the East Siberian Pacific Ocean Pipeline (ESPO) have allowed Moscow to corner the independent Chinese refining sector.
Heightening tensions in the Strait of Hormuz belie a deeper shift taking place in the Middle East. A twin-track oil industry is taking root, with long-term implications for the region.
Historically, the region’s producers have been comforted by the fact that their medium-heavy crudes have been a regular staple of refinery diets, particularly in India and China — the future axis of demand growth out to 2040.
But Asian refiners are getting used to a new reality: living in a market awash with crude of global origins. Spot west African crudes — previously destined for Europe but displaced by surging US exports — have found their way to China. US grades are becoming a more regular staple of Asian refiners’ diet, while Russia’s growing oil pipeline exports via the East Siberian Pacific Ocean Pipeline (ESPO) have allowed Moscow to corner the independent Chinese refining sector.
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