European refiners now seem to have more crude oil than they need—with the early panic about Russia’s dwindling oil exports—and the world’s subsequent oil shortage—proving to be overblown.
Crude oil traders have pointed to Europe’s ability to source crude oil from Latin America, the Middle East, and the United States as the main cause for European refiners breathing a sigh of relief. Asia, too, has scooped up less crude oil than analysts were predicting, thanks to China’s neverending battle to obtain the elusive zero-covid goal.
Europe’s imports of Latin American crude have averaged 313,000 bpd so far this year, up from 132,000 Refinitiv Eikon data shows. In July, the average was well above that, at 600,000 bpd. From the United States, Europe has taken 1.1 million bpd on average this year, compared with just 800,000 bpd last year. Europe’s Iraqi oil imports are 20% higher from July-November compared to the same period last year.
The supply overages are weighing on prices. Brent prices have slumped nearly $9 per barrel since this time last week. One European crude oil trader told Reuters that European refiners “seem to have overbought in November and December, probably because of fears around Urals.” In addition to these fears causing panic purchases, weeks-long strikes at French refineries and a rash of refinery maintenance also curbed the call for crude oil in Europe as runs slowed.
Traders and refiners increased their purchases over this summer, anticipating shortages stemming from Europe’s ban on imports of Russian crude oil. That ban is set to go into effect on December 5. Until then, Europe will likely have no issues with obtaining enough crude oil. Post-December 5, however, could be a different story.