We expect crude output developments over the next few months to be supportive for sweet crude premiums vs. sour grades as declines in sweet supply – most visible in the US – are accompanied by ongoing increases in sour output.

  • We forecast that a group of countries/regions including Iraq, Iran, total Asia-Pacific, Russia, Brazil, Nigeria and the US – which together constitute some 38 million b/d of crude supply – will see a collective decline of 115,000 b/d of sweet supply by April
  • This same group will see their combined sour output rise by 85,000 b/d over the same period (SuDeP), mainly thanks to returning Iranian volumes early in 2016
  • This is likely to drive a slowing or potentially even a (temporary) reversal of the long-term trend towards narrower crude quality spreads seen over the last few years as a result of US shale supply growth and rising average refining complexity globally