Similarly high exports have been last observed before April 2020, which itself has seen much higher exports amid the temporary price war between OPEC+ proponents that– together with the Covid-19 repercussion – drove oil prices close to zero.
Crude exports from key Middle Eastern exporters (mn b/d)
An increase in exports from key OPEC players would also be expected, after Saudi Arabia, UAE, Iraq and Kuwait have actually seen falling exports in May and June, at a time when production targets have already been relaxed. But the increase in supply would be expected to be up to 1mn b/d, and not 2mn b/d or more.
Ballast VLCC & Suezmax Availability in Persian Gulf (within 0-14 days)
Without question, this jump in exports from countries like Saudi Arabia and UAE is peculiar at a point of time where these players are in a standoff concerning the future production policy of OPEC+. The narrow time window makes planned efforts as some type of warning signal or temporary free-riding questionable. But this latest development may very well contribute to finding and accepting a compromise amid all OPEC+ members, warming up the memories of April 2020, especially amid another covid wave in Asia. Rumours of a more or less imminent solution have spread through markets recently.
Meanwhile, for now the 13-day stretch of high exports does not mean that Asia will get flooded with crude. The marginal cargoes are likely to make the relatively long journey to China, diluting the impact over time. Higher exports now would also help to make up for the very low exports in the second half of June. Finally, some of these cargoes could temporarily head to storage destinations held by the exporters in Northeast Asia. At any rate, there are no signals yet from a pricing perspective that the recent tightness in physical crude markets is easing, and any additional available cargo to Asian refiners is welcomed.