Persian Gulf oil refineries, going through the biggest expansion in decades, are about to ship the largest amount of fuels such as gasoline to Asia in eight months, lists of shipping charters show.
Traders hired ships in the spot market to load 3.91 million metric tons of refined petroleum in the four weeks to Aug. 10, according to vessel booking data compiled by Bloomberg yesterday. The tally, the highest since December, doesn’t capture shipments organized under long-term charters and shipbrokers don’t report all transactions.
Middle East nations led by Saudi Arabia, the biggest crude exporter, are increasing their ability to refine the oil and profit from higher prices that processed fuels fetch. The region will add 815,000 barrels a day of capacity by the end of this year, according to estimates by Vienna-based analysts JBC Energy GmbH. That’s about as much as the industry’s largest product tankers normally transport.
“We see this increased flow of cargoes to Asia as a structural change that is likely to carry on for a few years,” Michael Dei-Michei, energy-market analyst at JBC Energy, said by phone on July 28. “Refinery intake growth at countries such as Saudi Arabia, Kuwait and Oman has been pretty impressive so far this year.”
Ship-charters can be canceled in private or vessels can sail to destinations other than those reported. The data excluded any ship that was booked twice within a 45-day period, about how long a ship sailing to Japan and back from Saudi Arabia would take.
Asia’s importance as a source of demand is rising because Russia is increasing fuel shipments to Europe and surging oil production in the U.S. has curbed the nation’s dependence on foreign energy. China’s gasoline demand rose 16 percent in June and consumption of middle distillates such as diesel advanced 6.9 percent, according to HSBC Holdings Plc.
“We do think Chinese demand is improving,” said Abhishek Deshpande, a London-based oil markets analyst at Natixis SA, an investment bank. “Another factor for the increased flows from the Middle East could be that their refiners are undercutting Asian ones by selling at attractive prices.”