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By Ahmad Ghaddar, Ron Bousso and Noah Browning
LONDON, Oct 16 (Reuters) - U.S. sanctions imposed last month
on subsidiaries of vast Chinese shipping fleet Cosco have given
an unexpected boost to European refiners as less crude oil from
the North Sea and West Africa heads east, traders and analysts
said. Freight rates have soared as oil producers scramble for
non-blacklisted vessels, discouraging longer-distance voyages.
Complex refining margins for advanced facilities capable of
extracting even more valuable products like diesel and gasoline,
have been especially strong in Europe, industry sources said.
The U.S. sanctions have had a particularly heavy impact on
the cost of hiring very large crude carriers (VLCCs), those most
commonly used on long-haul journeys.
"As a result, refiners and traders, will look to buy
regional grades, ideally with dedicated vessels," a report by
the Oxford Institute for Energy Studies said.
Smaller tankers such as the Aframax, used more commonly
within the Atlantic basin, offer a relatively better deal.
"High freight rates for crude are keeping crude in the
Atlantic basin relatively cheap," a crude trader said.
Freight rates for shipping West African oil to Europe have
eased, from world scale 275 to 230 according to a European
importer, making it a more attractive destination than markets
in the Americas and Asia.
Spanish energy company Cepsa CPF.GQ snapped up at least
four cargoes of light sweet Nigerian oil last week, traders
said.
However, a showdown between buyers and sellers over
shouldering the higher shipping costs has yet to be resolved.
"I would argue that the burden should be shared, with buyers
not expecting sellers to eat all the cost and buyers accepting a
hit on refining margins," a seller of Nigerian crude said.
Refineries like Britain's Grangemouth plant, which receive
their crude via pipeline from the North Sea, are best placed to
profit as they can bypass shipping altogether.
GASOLINE, NEW SHIPPING FUELS
European gasoline margins would normally ease at the end of
the U.S. summer driving season as exports dip. But attacks last
month on two major oil facilities in Saudi Arabia led to a surge
in exports from Europe to the Mideast Gulf, helping keep margins
unseasonably buoyant.
Also boosting refiners is rising demand for distillates in
preparation for the International Maritime Organization's new
maritime fuel rules. "It's very bullish for products going into next year," Vitol
chief executive Russell Hardy said at an industry event last
week.
"The market is going to be called upon to supply sufficient
gasoil and low-sulphur fuel oil. On the flip side, there's 2
million barrels per day of high-sulphur fuel oil that needs a
place to go," he added.
Middle and heavy margins https://tmsnrt.rs/2ONLBrT
Light end margins https://tmsnrt.rs/2Jaj2kT
European Middle and Heavy Distillate Cracks png https://tmsnrt.rs/2VMaNQR
European Light Distillate Cracks png https://tmsnrt.rs/31iRGiB
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