Note published to @SpartaCommo clients last evening, do subscribe if you have not already: Saudi E/W pipeline outage update 13 Sep 26 - 15:00 CEST 1⃣ According to the Ministry of Energy, the Saudi East-West pipeline in the Riyadh and Madinah regions was subjected to multiple attacks on Thursday 10 September. The pipeline has been shutdown as a precautionary measure. This pipeline typically carries Arab Light and Arab Heavy crude, both to domestic refineries and to the export markets. 2⃣ Duration of the outage is unknown. The attacks apparently came from Iraq, and not directly related to the Houthis that had seized the port city of Mocha on Thursday. 3⃣ If the pipelines flows are restored within a short time, there should have enough buffer within the system to keep the domestic refineries running. However exports of crude via the Red Sea will be met with some difficulty after drawing down from tank inventories at Yanbu. 4⃣ Additionally production shut-ins are likely if the crude stocks hits tank top on the Eastern side of Saudi. We anticipate dirty freight availability to be the key constraint in managing the evacuation option ex Ras Tanura. This will support TD3c markets further. 5⃣ European refiners (particularly in the Med) that have been relying on Saudi crude ex Sidi Kerir will also face temporary prompt shortages. This will mirror how Asian refineries reacted at the onset of the SoH closure, whereby reducing runrates is the likely outcome while waiting for viable crude replacements to arrive. 6⃣ Eastern refiners are not fully spared from this scenario as well since Korea and Japan have been seen chartering cargoes ex-Sidi Kerir but at least they may still benefit from getting crude ex Gulf of Oman in a shorter time if Saudi is able to offer this option. 7⃣ 400 kbd YASREF refinery, 400 kbd SAMREF and 245 kbd Yanbu refinery exports products, mainly distillates. If the pipeline outage exceeds the time the refineries have on available crude buffers, then the refineries may be forced to shutdown later due to crude unavailability. This is the likely worst case scenario which will only happen if the pipeline is out for an extended period of time. 8⃣ This means the diesel tightness we have seen in Europe will become further exacerbated with some Med refineries turning down on intake in the prompt while reevaluating crude replacement options, and potentially facing the worst-case scenario of the Saudi refineries themselves not exporting products. 9⃣ Thus we are likely going to see higher flatprice, Brent-Dubai EFS, DFL, prompt crude timespreads, crude FOB diffs, diesel timespreads and even stronger cracks when we start the week, until further clarity is found. This is of course subject to any new headlines of peace deals that can quickly temper the excitement. 🔟 Jet and mogas cracks will likely be pulled up by the diesel strength. Dirty freight could also move up with more inefficient freight routings anticipated. An extended outage could also see IEA coming in with further SPR release to calm the markets, but that buffer is getting thinner. #oott#

If you didn't get a chance to read my longer piece back at the start of summer here is a condensed version. De-escalation has morphed into the SoH shuttle trade with the same freight impacts so far. ⛴️

Who's in #Singapore# next week? Come say hi during the Sparta Refuel Singapore drinks on Monday 7 September at Skai Bar. I promise to be on my best behaviour, maybe dish out a brownie or two 😀 Registration link here:

Oil market terminology can be very confusing. The latest one is the word 'Reserves". Proven Reserves: Volumes of oil that is judged to be recoverable from known accumulations with around 90% certainty. So the oil is there and you can technically get it out with current technology. Strategic Petroleum Reserves (SPR): Physical inventory already produced and stored for emergency supply disruption. So.... Is Venezuela's 300 bn barrels of oil reserves easy to extract? No. The crude is extra-heavy and so viscous that at reservoir temperature, it barely flows. Can you move the Venz proven reserves into SPR, like within the next few months, for emergency supply disruption purposes? No. #oott#

A view from Asia 7 months into the US-Iran war The biggest difference from my last update is the sentiment surrounding crude flows out of the Strait of Hormuz. Leaking is probably not the right word anymore. Asia can now afford to keep runs high as more oil from the Middle East gets out, with the risk shifting to the sellers as cargoes are basis FOB STS Fujairah. Japan and Korea have also increased US crude imports for end Oct onwards deliveries). On the refining side, I haven't heard any new updates on Jizan. Russia refining remains disrupted. US is already doing its best to run max and defer turnarounds where possible. China seems to be back at higher runrates, but it's far from offsetting the total refining losses from the Middle East and Russia. On 27 Feb, Singapore diesel prices were around $94/bbl and mogas around $80$/bbl. Fast forward today, that number is now $154/bbl and $110/bbl, which is 64% and 38% increase respectively. The average consumer has felt some pain but some governments have stepped in to subsidize some of the price increases. Malaysia for example has introduced a shared monthly quota for diesel at RM2.10/litre at retail stations since July. The unsubsidized rate is RM4.72/litre! It feels like we have reached some sort of acceptance towards higher diesel and gasoline prices. But as I survey the global refining system, it still feels very vulnerable, particularly to meet diesel demand heading into winter season in Europe. At least for Asia, we are looking to be in better shape than we were back in March for as long as those crude barrels get physically shipped safely into our region. #oott#

Oil market terminology can be very confusing. The latest one is the word 'Reserves". Proven Reserves: Volumes of oil that is judged to be recoverable from known accumulations with around 90% certainty. So the oil is there and you can technically get it out with current technology. Strategic Petroleum Reserves (SPR): Physical inventory already produced and stored for emergency supply disruption. So.... Is Venezuela's 300 bn barrels of oil reserves easy to extract? No. The crude is extra-heavy and so viscous that at reservoir temperature, it barely flows. Can you move the Venz proven reserves into SPR, like within the next few months, for emergency supply disruption purposes? No. #oott#

If you are in Singapore next week, join me as I discuss The New Energy Security Paradigm in Asia with @mukesh_energy and @VandanaHari_SG. Registration link here: #oott#

If you are in Singapore next week, join me as I discuss The New Energy Security Paradigm in Asia with @mukesh_energy and @VandanaHari_SG. Registration link here: #oott#

A view from Asia 7 months into the US-Iran war The biggest difference from my last update is the sentiment surrounding crude flows out of the Strait of Hormuz. Leaking is probably not the right word anymore. Asia can now afford to keep runs high as more oil from the Middle East gets out, with the risk shifting to the sellers as cargoes are basis FOB STS Fujairah. Japan and Korea have also increased US crude imports for end Oct onwards deliveries). On the refining side, I haven't heard any new updates on Jizan. Russia refining remains disrupted. US is already doing its best to run max and defer turnarounds where possible. China seems to be back at higher runrates, but it's far from offsetting the total refining losses from the Middle East and Russia. On 27 Feb, Singapore diesel prices were around $94/bbl and mogas around $80$/bbl. Fast forward today, that number is now $154/bbl and $110/bbl, which is 64% and 38% increase respectively. The average consumer has felt some pain but some governments have stepped in to subsidize some of the price increases. Malaysia for example has introduced a shared monthly quota for diesel at RM2.10/litre at retail stations since July. The unsubsidized rate is RM4.72/litre! It feels like we have reached some sort of acceptance towards higher diesel and gasoline prices. But as I survey the global refining system, it still feels very vulnerable, particularly to meet diesel demand heading into winter season in Europe. At least for Asia, we are looking to be in better shape than we were back in March for as long as those crude barrels get physically shipped safely into our region. #oott#

Asian refinery runrates are out of the Asian Buying Conundrum. Runrates should remain strong now given plenty of AG supply options. But China has been (cleverly) reopting out of WAF barrels. Read article for more details. #oott#

Atlantic fuel oil can't catch a break. Venezuelan barrels keep flooding the market and Iraqi molecules are sneaking in via the Syria-Jordan route, wrecking blending margins. The East, meanwhile, is short on resin as Russian exports keep falling. Nikolas Plonski breaks it down: #oott# #fueloil# #oilmarkets# #commoditytrading#

A Iran-Oman deal in Hormuz? Yet a tanker is hit in the same week. This week: Jay Maroo, Aaron Kildow and Nikolas Plonski on what's actually moving. Inside this episode: ▸ SPR barrels – why the US is releasing the wrong crude at the worst time ▸ TI-Brent squeeze – why Gulf Coast barrels can't compete into Europe right now ▸ Diesel's east-west blowout – the spread just hit minus $90 a ton Listen now: #oott# #oilmarkets# #crudeoil# #commoditytrading# #oiltrading#

Asian refinery runrates are out of the Asian Buying Conundrum. Runrates should remain strong now given plenty of AG supply options. But China has been (cleverly) reopting out of WAF barrels. Read article for more details. #oott#

Terminology in the oil industry is always bewildering. For example: Arab Light crude is not really a light crude API can mean A) a measure of oil density B) American Petroleum Institute C) Application Programming Interface Crackers can mean A) catalytic crackers (FCCs, RFCCs) B) steam crackers (for petchem) Condensate can mean A) a very light crude B) water produced in the heating process of boilers Anything more to add? #oott#