Daily Energy Report
EU Crude imports set record, Russia’s ESPO crude flip to premium, Diesel supply strain, China refinery output, Russia/Turkey gas talks, Biden’s Iran policy, China’s emissions/growth, and more
Chart of the Day: Surprise! EU crude imports are at a record high, despite penetration of electric vehicles.
Figure (1) above shows the imports of crude and condensates of the 27 members of the EU. Imports peaked in 2017 but now the record has been broken: EU imports of crude and condensates are at a record high despite the widespread use of electric vehicles.
EOA’s Main Takeaway
We do not have the recent consumption numbers in these countries. Consumption numbers tell a better story than imports. However, lower consumption with increasing imports means the EU is in big trouble.
The record import numbers are a significant development: despite the increased numbers of electric vehicles and the recession in some countries, crude and condensate imports increased. In other words, EU's dependence on importing one of the “fossil fuel” sources increased. In our view, one of the reasons (as we discussed in the past) is the subsidies that several EU governments provided last year. Some of them are still in effect today.
Speaking of dependence on imports, the EU is not only dependent on US LNG but also on US crude and condensates as shown in Figure (2) below. Europe is the natural market for US oil given the geography and the logistics, especially after the pivot of Saudi Arabia and the rest of the Gulf States to Asia. This puts Europe’s energy supplies under the mercy of hurricanes in the Gulf of Mexico and US politics!
Story of the Day
October prices for Russia's ESPO Blend crude oil from the Kozmino port have risen to a premium of over 50 cents against ICE Brent for delivery in Chinese ports, returning to pre-sanction levels. Before sanctions and the price cap on Russian oil due to military actions in Ukraine, ESPO Blend, a favorite among Chinese refiners, traded at a premium to both Brent and Dubai benchmarks. Despite past drops in price, high fuel demand in Asia has elevated China's intake of the cheaper ESPO Blend over Middle Eastern and West African alternatives.