Middle distillate demand growth (y-o-y) has been strong and steady across the globe, although growth in the West of Suez region is typically higher than that seen further east (see Global Refinery Margins – Issue 27).

  • Last year crude intake in the West rose to meet this new demand, but this year’s ability to do so has proven more difficult on the back of strong refinery maintenance/outages as well as weaker margins.
  • A spate of new refining capacity in the east is boosting crude intake growth there well beyond demand growth, something that is impacting arbitrage spreads, and resulting in more Asian product flowing west.
  • We expect this trend to be particularly pronounced over Q3.