Mideast Gulf gasoline premiums at four-year low

Gasoline premiums in the Middle East fell to levels last recorded during the Covid-19 pandemic as the region became oversupplied as a result of high refinery runs.

The 92R Mideast Gulf gasoline premium declined to a four-year low of $1.80/bl on 27 May, while the backwardation in the product's market structure, where prompt-month gasoline cargoes are sold at a premium to forward months, has been narrowing in recent trading sessions.

The premium was last lower in July 2020 with the steep fall in demand during pandemic lockdowns.

Refinery runs have been high with the regional refinery maintenance season drawing to an end.

"Many refineries are now producing at full throttle as expectations are still high for seasonal demand," a Dubai-based gasoline trader said.

A 45-day turnaround at Saudi Aramco and Total's joint-venture 460,000 b/d Satorp refinery in Jubail, Saudi Arabia, will end in mid-June, adding to regional gasoline supplies.

Gasoline exports from the Middle East typically head to Pakistan and east Africa, but there have been unusual flows from Saudi Arabia to west of Suez markets. Around 189,000t of Saudi gasoline arrived in the Netherlands, Latvia and Belgium in April, the highest since at least May 2019, according to Kpler data. The rare flows could have also emerged because of a relatively heavy maintenance season in Europe, but escalating freight rates and subdued domestic gasoline demand in Europe are likely to discourage arbitrage economics.

Singapore was another unusual destination for gasoline cargoes from the UAE, Saudi Arabia and Oman this month, with imports touching 190,000t, only around 50,000t lower from the record volume in February.

Slimmer demand from Iraq, a traditional importer, has been impacting the persistent supply glut as have higher exports from Kuwait, a significant importer in the past.

Iraqi state-owned Somo has trimmed down its requirements following the start-up of the 140,000 b/d Karbala refinery, built to reduce the country's dependence on product imports. Somo's new term import requirements for May-December fell to 13.55mn bl, from the 15.82mn bl imported during October 2023-March 2024.

Kuwait's exports rose to 259,000t in 2023 from zero in 2022, following the completion of the Clean Fuels Project (CFP).

The resolution of a series of issues at the Mina Abdullah and Mina al-Ahmadi refineries, which curtailed exports in the first quarter, will enable state-owned KPC to make more cargoes available, adding to the regional glut, traders said.

KPC recently offered non-oxygenated gasoline blendstock for loading in June.

By Rithika Krishna