Our Europe, Middle East & Africa Quarterly (EMEAQ) provides comprehensive analysis of the EMEA region, examining key topics in depth and providing a detailed guide to regional supply, demand, trade flows and downstream capacity. Each quarter, focus pieces delve into key issues that will impact the market in the near and medium term.
In this edition:
- In Focus: European refining margins have got off to a relatively weak start in 2018, prompting suggestions that the ‘silver age’ is losing its shine—but global demand is strong, 2018 net refinery additions are limited, OECD product stocks are now below the five-year average, and the IMO’s new 0.5% sulphur rules are looming on the horizon. So any period of weakness will be short-lived, even if margins will struggle to return to the heady heights of H2 17.
- In Focus: IMO will also be a game-changer for sour crude differentials. Come 2020, there will likely be an excess of at least 2 mb/d of high-sulphur fuel oil, placing significant downward pressure on fuel oil cracks, so price will need to do the work to route heavy crudes to refineries best suited to destroy heavy molecules and remove sulphur from oil. Brent-Dubai will widen accordingly.
- Macroeconomic outlook: Low-sulphur crudes will be highly sought after as the IMO switch approaches, so developments in Nigeria, where militant attacks are being kept at bay by delicately balanced government initiatives, will be closely watched. South Africa is another country seemingly on the road to recovery, but its new president has his work cut out for him.
- Outlook for oil products: One of the key swing factors for fuel oil, especially ahead of the IMO rules, will be just how much Saudi Arabia—the world’s largest fuel oil consumer—is able to increase its demand by. Fuel oil demand in the Kingdom will likely stagnate this year, owing to recent tariff hikes, but the medium-term outlook is brighter.
- Outlook for crude: Like Nigeria, Libya is a large light sweet crude producer whose output is holding up remarkably well in the face of geopolitical strife. Output could rise by another 0.15 mb/d if upstream investment materialises, but downside risks remain hefty given underlying political divisions.
EMEAQ also provides a unique and comprehensive overview of key regional data, focusing on: demand, refining, supply, trade flows and prices, including domestic consumption by country and by oil product for key European, Middle Eastern and African countries; refining capacity and upcoming projects by country; refined products output; and crude output by country, with a detailed focus on the largest regional players. We now also publish detailed analysis on Sub-Saharan African markets, given their growing importance in determining global product flows.