- Tight availability will put pressure on Asia’s throughput rates
- India, China will keep eyeing discounted spot Ural cargoes
- Asia’s 2022 demand growth could be smaller than previously expected
Asia’s run rates and oil demand will come under pressure in coming months on the back of high oil prices and tight feedstock availability, and the swelling availability of spot Russian cargoes shunned by buyers elsewhere may do little to ease Asia’s pain, speakers at the S&P Global Commodity Insights Asian Refining and Petrochemicals Summit said.
Rising inflation in Asia
In addition, higher energy prices are already adding to the headache of policymakers in Asia due to rising inflation and its potential impact on prices of food and agricultural commodities, the delegates said.
“We’re expecting significant run rate cuts at existing refineries due to the tight supply of crudes worldwide, and it will take time for the market to get balanced again,” Royston Huan, analyst for strategy and market research at PetroChina, told the summit.
On the issue of whether Chinese companies will be interested in buying a lot of Russian seaborne cargoes, Zhang Jing, senior analyst with Unipec, said: “We have to consider things at all levels, like whether the sanctions will be involved, as well as cargo insurance and loading issues.”
Buying Russian Urals
A senior official with a Chinese state-owned trading firm said Chinese crude buyers were likely return to the spot market to buy Russian Urals.
Sinopec is a leading Urals buyer in China, with about 3.52 million barrels of Urals loaded in January and delivered to the country in March, Kpler data showed. Cargo arrivals in China in April, which were loaded in February, would rise to 4.03 million barrels, with Sinopec remaining the leading buyer, according to Kpler.
Benchmark Platts Dated Brent was trading at $107.955/b in early Asian trade March 16, down from a 14-year high of $137.65/b on March 8.
Moreover, the discount for a Suezmax cargo of Urals against Dated Brent hit a record high of $33.36 on an FOB Novorossiisk basis March 15, S&P Global Commodity Insights’ Platts assessment showed.
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Source: Platts
