Eastbound North Sea crude exports slow to a crawl

The majority of North Sea crude exports stayed close to home last month as demand from Asia dried up and European refiners sought short-haul alternatives to Russian Urals.

Just 2pc of the more than 1mn b/d of June-loaded North Sea exports — comprising a single cargo of the UK's niche Schiehallion blend — sailed for Asia-Pacific last month, according to Vortexa data. About 7pc headed to the US and the rest stayed in Europe.

The Asian market typically accounts for about a third of North Sea crude exports, but shipments to the region have been declining steadily since Russia's invasion of Ukraine prompted a shift in oil trade flows. No shipments of either Forties or Johan Sverdrup, usually popular grades among Asia-Pacific refiners, sailed east last month.

Asia accounted for about 67pc of combined Forties and Johan Sverdrup exports in 2021 and 61pc in January-February this year. That share began to plummet after the war started in Ukraine, dropping to 27pc in March, 9pc in April and 14pc in May.

Demand from China, which typically drives Asian buying of North Sea crude, has been curtailed in recent months because of extensive lockdown restrictions. Beijing has also been stepping up its purchases of heavily-discounted Urals cargoes. Much of the Urals that would typically go to northwest Europe is being redirected to India and the Mediterranean as well.

Meanwhile, demand for North Sea crude in northwest Europe — Forties and Johan Sverdrup in particular — has jumped since buyers in the region began boycotting spot purchases of Urals. About 96pc of the Forties and Johan Sverdrup exported from the UK and Norway last month remained in Europe, mainly northwest Europe, according to Vortexa data. The remainder headed for the US.

By Felix Todd