Europe’s gasoline exports have increasingly begun to shift toward Asia in recent weeks as the crude supply shock in the Middle East is tightening Asian fuel supplies.
Europe typically sends most of the gasoline it exports to the United States, West Africa and South America. But in these unusual times of the biggest ever disruption to the oil market, more European gasoline shipments are heading to Asia.
Over the past week, at least 1.6 million barrels of gasoline, transported in three tankers, were loaded from Europe and are on their way to Asia, Reuters reported on Monday, citing ship tracking data and trade sources.
The crude supply crisis in the Middle East, on which Asia depended for much of its imports before the war, is sending shockwaves through Asian countries as they struggle to preserve domestic supplies with bans or limits on fuel exports.
Despite sky-high refining margins, Asian refiners are reducing processing rates amid the crude supply shock. This also tightens fuel markets in Asia.
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Sinopec, Asia’s largest refiner by capacity, reportedly reduced its run rates by 10%, while China banned fuel exports.
In Southeast Asia, Thailand and Vietnam have also restricted fuel exports, while the Philippines and Pakistan have adopted a four-day work week, a move Pakistan implemented under a “war austerity plan.”
With margins increasing in Asia, traders are now moving more gasoline to Asia and the broader Asia Pacific region, including U.S. cargoes to Australia. Earlier this month, Exxon was scheduled to ship its first shipment of gasoline from the U.S. Gulf Coast to Australia.
The Asian region now looks to India as a potential savior, hoping it can redirect some of its fuel exports from the Middle East to Asia. But some Indian refiners have also reduced fuel export cargoes, further putting pressure on tight fuel supplies.
Earlier this month, India’s state-owned refiner Mangalore Refinery and Petrochemicals Limited (MRPL) declared force majeure on all gasoline export shipments planned for March and April, as the Middle East war is halting supplies of Gulf crude.
By Michael Kern for Oilprice.com
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