Unbelievable Twist in Oil Markets: Angolan Crude Makes a Stunning Comeback, Surpassing European Expectations! Find Out Why European Refineries Are Flocking to Angola Amid Record-breaking Spreads!

Angolan Crude

In a surprising turn of events, record-breaking spreads in West African crude markets have sparked a resurgence in Angolan trade. Angolan exports to Europe have reached their highest levels since 2016, signaling a notable recovery. The price spreads between comparable West African crudes have hit unprecedented highs, attracting attention to the previously struggling Angolan segment. European refineries, grappling with spiking middle distillate cracks and a squeeze in North Sea and Mediterranean crude supply, are now turning to West African crudes to optimize diesel and jet fuel production. While Nigerian crudes experienced a significant surge due to their light to medium sweet nature and abundant yields of middle distillates, the subsequent Angolan rally has been more restrained. The heavier nature of Angolan crudes, with higher proportions of gasoil, faced challenges amid less favorable European refining economics. The European market, traditionally reliant on Chinese buyers for many Angolan grades, has presented a unique dynamic. The absence of Chinese demand due to volatile COVID-19 cases has impacted Angolan differentials for months. However, recent developments, including a surge in light sweet differentials across the Mediterranean and Nigeria, have led European refiners to explore value in these heavily discounted Angolan crudes. The spreads between Angolan and Nigerian crudes have widened significantly. For instance, Angolan Girassol was assessed at a $2.00/b premium to Dated Brent, showing an increase but still trailing behind Nigerian Forcados by $5.30/b, its highest-ever discount. Despite concerns about a 10 million barrel overhang in the market leading up to June trading, Angolan crudes have managed to find favor among European refiners. An unexpected rally in differentials, better than initially anticipated, has contributed to upbeat sentiment for the weeks ahead. While the looming decline in Nigerian values may impact opportunities for July cargoes, the significant spread between Angola and Nigeria remains. Although the discount may not be as attractive as before, the renewed interest from unusual buyers suggests that Angolan crudes are still in the game. The positive outlook for Angolan crude marks a remarkable shift, offering hope in a market driven by evolving dynamics.

Leave a Comment