JBC Energy sees only minor repercussions for crude markets from a significant shift in global crude quality towards heavier and sourer barrels in 2016 (see Global Refinery Margins– Issue 31)
- We see a net-decline of 780,000 b/d in the production of sweet crudes this year, while sour crude output should increase y-o-y by some 590,000 b/d.
- At the same time, light flows are set to decrease by almost 700,000 b/d y-o-y this year, while crude streams below 33° API will see an increase of 500,000 b/d compared to last year.
- Relatively speaking, we are about to experience a shift in the global crude slate that is 0.9pp sourer and 0.8pp heavier than in 2015.
- In a balanced market, the natural impact of such changes in feedstock availability would appear to be a clear widening of light/heavy crude spreads. But steadily growing global conversion capacity is more than enough to cope with the additional medium sour barrels. Thus a rebalanced world might not mean that much for light/heavy crude spreads.