RPT-COLUMN-OPEC cuts make global crude supply lighter and sweeter: Kemp
(Repeats March 17 column. John Kemp is a Reuters market analyst. The views expressed are his own)
* Chart: tmsnrt.rs/2mQyu93
By John Kemp
LONDON, March 17 (Reuters) - OPEC’s production cuts have changed the quality of the global oil supply, shaking up the relationship between important crude benchmarks and altering purchasing calculations for refiners.
Most oil from shale formations in the United States as well as from the North Sea and West Africa is relatively low density and contains only a small percentage of sulphur.
Crude from Saudi Arabia and other countries around the Middle East Gulf, on the other hand, is mostly denser and contains much more sulphur (giving it an acrid odour).
Atlantic basin crudes are mostly “light” and “sweet” while Arabian crudes are mostly “medium” or “heavy” and “sour”.
The bulk of OPEC’s cuts have come from members exporting medium and heavy sour oils while members exporting lighter oils have cut much less or been exempted.
Light and sweet crudes are generally more valuable to refiners because they are much easier and less expensive to process. Continued...