The European refiners pay the price for the U.S. oil sanctions on Iran and Venezuela as they are trying to replace the sour crude America blocked from the global market with Russian oil, as Reuters reported.
“Compounding the impact of sanctions, OPEC members have mainly cut sour crude output as part of their deal with allied producers to boost oil prices while a large, new refinery, designed to run on sour oil, has just started up in Turkey,” the message reads.
As brand-new infrastructure comes online, the U.S. output is increasing and exports are set to jump later in 2019, yet, it is not an alternative as it is light and sweet.
“As a result, European refiners have been left competing to secure as much medium, sour Russian Urals as they can, pushing the differential of that oil to levels not seen since 2013,” the news agency reports.
“Urals is anchored in a positive zone versus dated Brent and there is no indication it will fall to a discount any time soon,” a trading source at a European oil major informed.