TRUTH PUKE’S TAKE: European oil refiners are facing a challenging situation as they struggle to replace the loss of Russian crude supplies, which have decreased by more than one million barrels per day since the country’s invasion of Ukraine in February 2022, due to ever-tightening sanctions. The loss of Russian crude comes at an unfortunate time as Iraq has halted shipments that reach Europe via a Turkish port in the Mediterranean Sea, and OPEC+ producers, including Russia, have announced supply curbs starting next month that will cut output by about 1.6 million barrels per day by July.
The Russian and Iraqi grades are of similar density and sulfur quality, and refiners in Asia, particularly China, are increasing their demand for this so-called medium-sour oil that forms their staple diet. According to analysts at Energy Aspects Ltd., a tough battle between Europe and Asia awaits, and Asia could outbid Europe for barrels, potentially triggering European run cuts to balance the crude market.
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