Europe’s efforts to exorcise Russian oil are forcing a major reshaping of global oil trade, creating new opportunities for Middle Eastern producers. Paul Horsnell, Global Head of Commodities at Standard Chartered, described Russia’s invasion of Ukraine as a watershed moment which has forced a major remapping of global trade flows during last month’s MPGC conference in Manama. Market observers see opportunities for Middle Eastern barrels to increasingly flow into Europe as many grades from the region match up well with Russia’s medium-sour Urals grade (31°API, 1.5% sulfur).

The Brent-Dubai Exchange for Futures Swaps (EFS) differential has widened to more than $10/B following Russia’s invasion of Ukraine and remains wide amid subsequent fluctuations. This has opened up an arbitrage window for Middle Eastern crudes to flow into Europe. Yet while there have been some indications of a tentative movement to capitalize on this, as yet there has been no large-scale displacement of Middle Eastern crudes from their core Asian markets. (CONTINUED - 1443 WORDS)