(Bloomberg) — Oil supplies from the Persian Gulf are expected to tighten further as Oman and Bahrain expand refining capacity and consume more regional crude to produce diesel and other fuels for export.
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The new Duqm refinery, a joint venture between Oman and Kuwait, has begun exporting its first cargo of refined products, according to people familiar with the matter. Traders expect the 230,000 barrel-per-day facility to be fully operational by early next year.
Bahrain is also expanding its Sitra refinery, increasing the production capacity of the 87-year-old crude oil processing plant from the current 267,000 barrels per day to about 400,000 barrels per day. The project will modernize equipment to produce jet fuel and diesel that meet European specifications, according to a person familiar with the plant’s operations. The expansion is expected to be completed by the end of 2024.
Operators of both facilities did not respond to requests for comment.
The two refineries will work together to further boost supplies of Middle Eastern crude, taking more than 300,000 barrels per day from export flows at a time when OPEC+ producers are already limiting their contribution to global markets. Become. The crude oil used in these processing plants would normally be shipped to refiners in Asia. Additional diesel production is likely to flow primarily to Europe.
Oil prices in London have risen more than 20% since June to $90 a barrel as Saudi Arabia implemented voluntary production cuts on top of quotas already set for the Organization of the Petroleum Exporting Countries and allied producers. exceeded. Margins for Asian refiners remain high as buyers compete for the best Middle Eastern barrels for their processing plants.
In addition, Kuwait this year brought online its newest refinery, a 615,000 barrel-per-day facility in Al Zour in the Persian Gulf. This has contributed to reducing the amount of oil leaked from the country to Asia. The country also supplies oil to the Duqm refinery.
Bahrain itself does not export crude oil, and the island nation receives most of its supply via pipeline from Saudi Arabia.
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