Global Crude Arbs To Watch: January 2021

Chart 1: US Exports: Asia Vs Europe

• The shifting dynamic between US crude/condensates exports heading to Asia vs. Europe is a key arb to watch going into 2021 and, for the rest of the year. 
• Notably in Europe, weaker crude intake from the region’s refineries in early 2021, due to gloomier prospects for road fuel demand, is already depressing transatlantic flows, compared with those seen several months ago. 
• Read more in our ‘2021 Trends to Watch in US Energy’ special report 

Chart 2: North Sea and Russia Black Sea arrivals into Asia

• Asian imports of North Sea and Caspian CPC Blend crude combined reached a multi-year high of over 1.1mn b/d in January, representing fiercer competition against Mideast Gulf grades.
• Recent limited appetite from European/Mediterranean buyers, along with weaker freight, supported a sharp jump in long haul flows. 
• Read more in our recent Insight note ‘More CPC Blend to sail to Asia in Q1 2021’

Chart 3: MEG vs Russia seaborne exports to Asia

• Notably Russian seaborne (excl. CPC) exports to Asia have been remarkably stable at around 1-1.1mn b/d since September 2020, compared to more volatile monthly shipments from MEG crude exports to Asia. 
• In particular, Chinese crude import demand and the evolution of OPEC+ production cuts will be played out across MEG-Russia crude export dynamics, meaning it remains a top arb to watch in coming months.