Interpreting Middle East Economic News and Analyzing Market Trends

World’s top oil exporter set to import record amount of diesel

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Source:  The Telegraph

Saudi Arabia, the world’s top oil exporter and key OPEC member, is set to import a record amount of diesel fuel as local demand continues to rise.  This is nothing new for Saudi Arabia or the rest of the oil exporting countries.  These countries face two issues, which they have been slow to address; above average energy consumption and slow investment into expanding local refining capacity.

 

Saudi Arabia will import near record high diesel volumes this summer, as it gears up to beat the sweltering heat and meet rising travel needs during, trade sources said.

State oil giant Saudi Aramco will import up to 8.9 million barrels of diesel in June, up from an estimated 6.7 to 7.5m barrels in May, according to the sources, who expect at least the same volume or higher to be booked for July.

Top oil exporter Saudi Arabia shipped in record diesel volumes of 8.99m barrels in July, 2011, up from 8.13m in June that year, government data published from 2002 through the Joint Organisations Data Initiative showed.

“I think this year, the July, 2011 number might be surpassed as Saudi’s diesel demand is growing every year and their new refinery is not expected at least until later this year,” a Gulf-based trader said.

Higher overseas purchases by Saudi Arabia should help boost spot premiums and support weak Asian gasoil margins as Aramco imports from countries such as India and Singapore.

Aramco relies heavily on imported diesel in summer when demand for electricity peaks with rising use of air conditioning as temperatures soar to a grilling 50 degrees Celsius.

To cut its imports, Aramco has planned three new refineries. But the first of these which will produce 176,000 barrels per day of diesel comes online in the second half of 2013, instead of the second quarter as previously expected, traders said.

Read the full story from The National.

 

Until these countries come up with a plan to deal with these two issues, they will continue to import an increasing amount of refined fuels to be consumed in their markets.  One of the key beneficiaries of oil exporters’ mismanagement of their natural resources is the US where it is now a net exporter of refined fuels thanks to its excess refining capacity.