LONDON/HOUSTON, Sept 6 (Askume) – Disruptions to Libyan oil exports have supported prices of Azerbaijani, African and U.S. oil grades, while some refiners are selling crude because of lower profit margins, traders and analysts told Askume.
Crude oil exports from Libya’s main port have been suspended for a week, the latest incident in the widespread unrest in the country. Libya is an OPEC member and accounts for about 1% of global oil output.
Two rival factions in the country agree on the appointment of a new central bank governor to ease the crisis
Patricio Valdivieso of consultant Rystad Energy said Azerbaijani and Algerian Saharan blends would be refiners’ first choice as an alternative to Libyan cargoes scheduled for October shipment.
Unsold West African crude or US WTI Midland crude in September could also replace Libyan crude in the short term, Valdivieso said.
A day after oil supply cuts from Libyan fields began, the price of US WTI Midland crude oil in Cushing strengthened compared to WTI crude oil in Cushing, with the gap between the two widening from 60 cents to 80 cents per barrel.
“US crude is a good alternative to Libyan light crude and can cross the Atlantic more quickly,” said Kpler analyst Matt Smith.
Kpler data shows that Europe’s WTI Midland imports rose to 1.43 million barrels per day in August, a quarterly increase of 24%, partly supported by supply disruptions at Libya’s Sharara oil field in early August.
Causes of unrest in LibyaBoth Azerbaijani and Kazakh crude prices rose sharply last week as refiners looked for alternative barrels.
Chaos in Libya attracted buyers to the West African crude market for September stocks, which were depleted due to low refining margins and upcoming maintenance.
Stocks in Nigeria of about 15 tonnes fell to about 10 tonnes or less by Friday, five traders in the West African market said, while about 15 tonnes in Angola remained unsold before Libyan oil reserves were shut, ending the sale of the cargo a week ago.
“Nigerian cargo supplies increased significantly in September, so the gap has not closed much, which shows Libya is also having an impact on the West African market,” said Victor Katona, chief crude oil analyst at Kpler IS.
Asian traders said crude oil prices are not rising due to supply disruptions in Libya as this month’s business cycle is still in the early stages.
Richard Bronze of Energy Aspects said poor European refining margins could force some refiners to reduce crude consumption rather than fully offset Libyan oil output.
London Stock Exchange data showed diesel refining profits in northwest Europe hit a two-and-a-half-year low of $13.12 a barrel on Aug. 28. Around the same time, gasoline margins fell to $5.82 a barrel, the lowest in 10 months.
