Mideast Gulf gasoline coursing to the US Atlantic coast

A record high amount of Mideast Gulf gasoline is on route to discharge at the US Atlantic coast this month, and more may be heading that way because of recent infrastructure issues in the US.

At least six tankers loaded around 350,000t (2.957mn bl) of gasoline from the Satorp berth at Saudi Arabia's Jubail port between the end of March and the beginning of May, according to Vortexa. All are destined for New York Harbor (NYH). The increase came after the 460,000 b/d Jubail Satorp refinery, a joint venture between state-owned Saudi Aramco and Total, began ramping up runs in April after planned partial maintenance that began in late February.

Total booked the Khawr Aladid — its first ever Long Range 2 (LR2) tanker on that route, according to traders — to load around 77,500t of gasoline back in March. It left Jubail on 29 March and discharged at NYH on 5 May, Vortexa shows. LR1 tanker Spruce 2, Medium Range (MR) tanker Aspen Express — chartered by ATC and Total respectively — and LR1 BW Yarra all loaded in Jubail between 9-16 April and are crossing the Atlantic for arrival at NYH in the next 10 days.

The LR1s Norstat Invictus and Amber left Jubail on 29 April and 3 May, respectively. The Amber, chartered by ATC, is scheduled to reach NYH on 4 June.

Fixtures show three more tankers chartered to carry a total of 180,000t of gasoline from the Mideast Gulf to the US Atlantic coast, all for loading this week. These may have been incentivized by a rise in NYH gasoline prices to a two-year high following a gasoline unit outage at Phillips 66's 250,000 b/d Bayway refinery in New Jersey last week.

In addition, a cyber breach last week halted operations on the US' Colonial Pipeline, which transports around 2.5mn b/d of gasoline and other oil products from 30 refineries in Texas, Louisiana and Mississippi to markets in the southeast and eastern seaboard up to NYH. Colonial began restarting smaller branch lines today, but said it cannot yet restore flows along its main lines.

NYH, which is structurally short on gasoline, has been increasingly reliant on imports as domestic arbitrage from the US Gulf coast is often unworkable. Incoming flows from Europe, a typical gasoline supplier to the US, slowed in April because of deteriorating transatlantic economics, leaving the Mideast Gulf as the next best source. The Mideast Gulf exported 164,000t of gasoline to the US Atlantic coast in 2020, and 359,000t in 2019 before the Covid-19 pandemic hit.

Mideast Gulf exports on the rise

Overall Mideast Gulf gasoline exports rose to 1.25mn t in April, the highest level for any month in Vortexa data that date back to 2016. As well as the surge in exports to the US Atlantic coast, outflows increased to more typical markets in east and southern Africa. Around 252,000t went to east Africa, up from 140,000t in March, and 126,000t to southern Africa after 34,000t in March.

Lower east-west spreads in March also incentivized higher exports to west Africa, a market that is typically supplied by Europe.

Gasoline demand in the Mideast Gulf remains under pressure from tight Covid-19 restrictions in Oman and Kuwait. Saudi Arabia, the region's biggest gasoline consumer, is scheduled to reopen its borders on 17 May, which may boost transport fuel demand.

The gasoline market east of Suez may face more cargoes being exported from India, which would compete with Mideast Gulf gasoline in export markets. India is struggling to contain the spread of Covid-19, and lockdowns are weighing on transport fuel demand there. Some refiners have postponed maintenance plans, although there are signs that high product stocks could be forcing others to cut crude runs.

By Ieva Paldaviciute