Europe’s gasoline exports have started to increasingly shift to Asia in recent weeks as the crude supply shock in the Middle East is tightening Asian fuel supply.
Europe usually ships most of its exported gasoline to the United States, West Africa, and South America. But in these unusual times of the biggest disruption in the oil market ever, more European gasoline cargoes are bound for Asia.
Over the past week, at least 1.6 million barrels of gasoline, carried by three tankers, have loaded from Europe and are en route to Asia, Reuters reported on Monday, citing ship-tracking data and trade sources.
The crude supply crisis in the Middle East, on which Asia relied for a large part of its imports before the war, is sending shockwaves through all Asian countries, which scramble to preserve domestic supply with bans or limits on fuel exports.
Despite sky-high refining margins, Asian refiners are curtailing processing rates amid the crude supply shock. This additionally tightens the fuel markets in Asia.
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Sinopec, the biggest refiner in Asia by capacity, has reportedly slashed its run rates by 10%, while China has banned fuel exports.
In Southeast Asia, Thailand and Vietnam have also restricted exports of fuels, while the Philippines and Pakistan have moved to a four-day work week, Pakistan’s move being implemented under a ‘war austerity plan’.
With soaring margins in Asia, traders are now moving more gasoline to Asia and the wider Asia Pacific region, including U.S. cargoes to Australia. Early this month, Exxon was slated to ship its first-ever gasoline shipment from the U.S. Gulf Coast to Australia.
The Asian region is now looking at India as a potential savior, hoping that India could redirect part of its fuel exports from the Middle East to Asia. But some Indian refiners have also reduced fuel export loadings, which further strains the tight fuel supply.
Early this month, Indian state-run refiner Mangalore Refinery and Petrochemicals Limited (MRPL) declared force majeure on all planned gasoline export cargoes for March and April as the Middle East war is halting crude supply out of the Gulf.
By Michael Kern for Oilprice.com
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