Oil demand in the 10 top-consuming Middle Eastern countries (ex-bunkering) rebounded in August, by 0.25 mb/d y/y to 6.82 mb/d, the largest increase since April 2017. Saudi demand rose by 0.37 mb/d y/y, with strong growth across all products. Saudi diesel demand (+27 thousand b/d y/y) continued its recovery, rising for the third consecutive month, in line with a pick-up in construction activity. Cement sales increased in September (+17% y/y) for the fourth straight month, suggesting diesel demand will continue to grow, as the government ramps up spending as part of its Vision 2030 plan. Jet fuel (+5 thousand b/d y/y) grew on support from the holiday travel season, with Middle Eastern passenger traffic rising by 2.9% y/y in August, although it remained below the historical average. Saudi gasoline demand rose by 2 thousand b/d y/y, with some support likely to come from the recovery in car sales across H1 19 (+23% y/y). Fuel oil demand (+0.28 mb/d y/y) grew seasonally on a rise in cooling demand, making the Kingdom a net fuel oil importer for the third straight month. Iraqi oil demand (-11 thousand b/d y/y) declined for a fifth consecutive month, driven by fuel oil, jet fuel and naphtha. Kuwaiti demand (-83 thousand b/d y/y) fell too.
Middle Eastern refinery runs rose by 0.16 mb/d m/m to 7.77 mb/d, lower y/y by 0.17 mb/d. Across Q3 19, we forecast runs at 7.64 mb/d, lower y/y by 0.26 mb/d due to the heavy curtailment of refinery runs as a result of the 14 September attacks on Saudi Aramco oil facilities. We estimate Saudi runs were reduced by 0.7 mb/d across the second half of September, making runs over the full month lower by 0.4 mb/d y/y. Saudi net diesel exports dropped by 0.1 mb/d m/m in September, and are likely to remain lower in October, while runs slowly ramp back up.