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Crude shipments from key Middle East producers reached a two-year high in June.
Oil producers in the Middle East boosted crude shipments by 1 million barrels a day last month. But don’t worry: They say they’re not embarking on another free-for-all like the one we witnessed just before the Covid-19 pandemic crushed demand.
The combined flows in June from Saudi Arabia, the United Arab Emirates, Kuwait and Iraq were the highest since April 2023, according to tanker tracking data compiled by Bloomberg.
Perhaps that shouldn’t come as a surprise.
They’re among eight members of the OPEC+ producer group that are unwinding output cuts made two years ago. Between March and June, their combined production target increased by 700,000 barrels a day.
It’s set to rise another 300,000 barrels a day this month and could jump by the same amount again in August, with ministers set to decide that on Sunday. All other things being equal, that ought to translate into even higher exports as the year progresses.
Key Crude Flows From Persian Gulf Producers
Combined shipments last month were the highest since April 2023
Producers were quick to explain June’s numbers.
They weren’t boosting exports, they said, but rather moving crude out of the Persian Gulf and into storage tanks elsewhere because of war in the region and threats to tankers using the Strait of Hormuz.
However, there’s little sign of vessels heading to Saudi-owned terminals in Japan, the UAE’s Fujairah or the Netherlands. Nor was there any upturn in shipments from the kingdom’s Red Sea export facility at Yanbu, outside the danger zone.
Satellite imagery of the Okinawa, Japan, site from late May suggests its tanks were already full before the surge in shipments.
It may just be matter of timing. If Saudi Arabian Oil Co. started diverting crude to its Red Sea outlet when the first Israeli missile hit Iran, the increase in Yanbu shipments may not show up until this month.
In addition, some tankers have yet to show a final destination. That’s not unusual and includes vessels only partly loaded by June 30 as well as others that probably won’t signal a course until they’ve passed Singapore.
We’ll have to wait a little longer to see if last month’s boost in shipments really does go into storage.
–Julian Lee, Bloomberg News
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