Middle Eastern November oil demand for the top seven countries eased in line with seasonal norms to 5.8 mb/d, although y/y growth remained elevated at 0.37 mb/d and we forecast 2015 demand growth to have averaged 0.32 mb/d. Despite several subsidy reforms being implemented in the region (e.g. Saudi gasoline prices were raised by an average of 8 cents, Omani gasoline prices were raised by a third, UAE altered subsidies in August), prices for gasoline continue to rank amongst the cheapest in the world. So, this is unlikely to be negative for gasoline demand in the short term. In November, Saudi gasoline demand rose back above 0.6 mb/d, higher y/y by a massive 60 thousand b/d, taking total products demand to 2.5 mb/d, higher y/y by 0.25 mb/d. Diesel demand remained strong at 0.74 mb/d, higher y/y by 32 thousand b/d, supported by ongoing construction work and a warm start to the winter (CDDs higher y/y by 25%). But warm temperatures failed to boost fuel oil demand, which was down by 9 thousand b/d y/y in November, although there seems to have been a move towards greater crude burn, higher y/y by 0.14 mb/d at nearly 0.5 mb/d. Demand growth in Qatar (+40 thousand b/d) remained strong, but eased in Kuwait and Iraq to broadly flat y/y on weaker fossil fuel demand in power generation. Looking ahead, Iranian demand has scope to surprise to the upside this year following the lifting of sanctions, with GDP growth expected to come in north of 5%. So, we expect Middle Eastern demand to grow by 0.3 mb/d in 2016, once again.
Middle Eastern refinery runs were pegged at 6.2 mb/d, lower m/m by 0.2 mainly due to unplanned outages in Kuwait and UAE. Saudi runs were broadly unchanged m/m at just above 2 mb/d, higher y/y by 0.25 mb/d. Combined with crude exports jumping to a seven-month high of 7.7 mb/d, and high domestic crude burn, Saudi crude stocks fell by 2.5 mb m/m.