After the US imposed sanctions on subsidiaries of Cosco, European refiners have received an unexpected boost, as less crude oil from the North Sea and West Africa heads east, Reuters reports. What is more freight rates have risen as oil producers seek non-blacklisted vessels.
Specifically, complex refining margins for advanced facilities that have the ability to extract even more valuable products like diesel and gasoline, have been especially strong in Europe.
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What is more, the US sanctions have impacted the cost of hiring very large crude carriers (VLCCs), with smaller tankers such as the Aframax, used more commonly within the Atlantic basin, offer a relatively better deal.
On the other hand, freight rates for shipping West African oil to Europe have eased, becoming a more attractive destination than markets in the Americas and Asia.
Typically, European gasoline margins ease at the end of the US summer, making exports to fall. However, the attacks that took place last month on two major oil facilities in Saudi Arabia, caused an increase in exports from Europe to the Mideast Gulf, thus keeping margins unseasonably buoyant, Reuters says.
In addition, growing demand for distillates is also boosting refiners, ahead of the IMO 2020 sulphur cap implementation.
