Europe’s seaborne crude imports fall to 2-year lows, shifting light-sweet crude supplies East
This insight explores the decline in Europe’s seaborne crude imports in May, the significant build in its onshore crude inventories and the impact on light-sweet crude flows.
Europe’s seaborne crude imports decline as onshore inventories build
Europe’s seaborne crude imports slumped to 9.8mbd in May (days 1-20), a 750kbd decrease m-o-m and 600kbd lower y-o-y. This decline coincides with Europe’s onshore (floating roof tanks) crude inventories building to 452mb as of the 20th May, the highest levels observed since December 2022. Europe’s seaborne crude imports have declined far further in May than is expected due to typical seasonal fluctuations, indicating Europe has ample crude supplies given its build in onshore crude inventories.
This build in Europe’s onshore crude inventories – a 40mb build since January 2024 – came at a time when Europe’s imports of US crude surpassed 2mbd for 3 consecutive months from December 2023 to February 2024. The additional stock builds since then have partly been a result of diesel cracks declining nearly $20/bl since February (Argus Media). Europe has also increased its diesel imports since February by 400kbd.
The decline in European demand for crude imports has resulted in light-sweet crude imports declining by 500kbd m-o-m to 4mbd in May (days 1-20), the lowest level since October 2022. Imports of WTI have declined 250kbd compared to the beginning of 2024, whilst crude imports from Libya and Azerbaijan declined 240kbd and 100kbd, m-o-m, respectively. This decline coincides with gasoline cracks rising $14/bl since the start of 2024, assessed at $24/bl as of 20th May (Argus Media).
Light-sweet crude on-the-water builds
The weakened demand from Europe resulted in light-sweet crude cargoes on-the-water to rise to a multi-year high, primarily from the US and WAf. Building to 220mb as of 20th May, a 20mb build m-o-m and 30mb higher than the 2023 average.
The major suppliers of light-sweet crude have increased exports and, as a result, have placed significant volumes of barrels on-the-water. The US has increased its light-sweet crude exports by 150kbd m-o-m to 3.65mbd in May (days 1-20). WAf exports of light-sweet crude also increased by 300kbd m-o-m to 1.1mbd in May. This was driven by Nigeria increasing Agbami and Amenam Blend exports, whilst Gabon increased its crude exports of light-sweet grades to a record-high of 300kbd.
Asia’s imports of light-sweet crude reach three-year high in May
Asia’s imports of light-sweet crude reached 2.75mbd in May (days 1-20), the highest levels since April 2021. This increase in imports has driven the increase in light-sweet crude on-the-water, as the transit-times to Asia are longer than to Europe. Whilst Europe has reduced imports of light-sweet crude, Asia has stepped in as the replacement buyer, with nearly 70% of its light-sweet crude imports in May being from the US.
Asia’s June arrivals (days 1-20) of light-sweet crude from the US suggest import levels will remain elevated at the values observed in May. The biggest Asian buyer of light-sweet crude in May was South Korea, which imported 800kbd, nearly twice the amount it imported in April.
Outlook
Looking ahead, seasonal trends suggest Europe’s crude imports could rise from current levels as we approach summer months. Refineries in Europe will favour gasoline and distillate-rich grades, but they likely already have ample supply, given higher imports in recent months and builds in onshore inventories.
The proximity of US, WAf and NAFr to Europe means that any uptick in the latter region’s crude demand would first lean upon these lighter and sweeter crude suppliers. This is especially given the ongoing diversions for tankers having to sail around the Cape of Good Hope when delivering crude from the Middle East Gulf to West of Suez. This also suits Asian refiners as they face (relatively) lower competition from West of Suez for the marginal medium/heavy-sour crude supply.
