From now until August, when peak refinery operations occur, the global refining system will require 3 million b/d more crude oil, with almost 1.5 million b/d of demand coming from North American and European markets. With an increase in refinery runs anticipated going forward, turnarounds in Canada in April, along with losses of crudes to the US from Venezuela and Mexico because of tariffs, US crude markets will face blending challenges. That could create an opportunity for similar quality crudes OPEC barrels to enter the market, at least through to the summer.
Outlook for Asian demand given the bearish tone at the start of the year?
Asian demand for crude oil remains steady, crucial for producing products as summer demand in the Atlantic region approaches. The growth in petrochemical feedstocks might offset declines in fuel consumption, resulting in a generally flat demand curve. However, until the China-US trade issues are resolved, it's unlikely we'll see significant positive shifts from China, despite their efforts to stimulate the economy. But even if domestic demand in China doesn't surge, the broader Asian refining demand for crude will remain robust, supporting the global market.
Is there appetite in Asia to continue defying US unilateral sanctions on Iran and Venezuela?
The trade flows involving sanctioned entities have become entrenched, so reversing these, would be a complex process. Also, if you consider the broad application of sanctions and tariffs on countries like Canada, Mexico, and Venezuela, tightening these could trigger a crisis in product availability in the Atlantic basin, leading to higher pump prices in the US. For that reason, there seems to be a deliberate avoidance of overly stringent sanctions to prevent these backfiring.