Macro

UAE Increases Iraqi Crude Imports Post Ruwais Refinery Upgrade

UAE boosts Iraqi crude imports to 1 million barrels after Ruwais refinery upgrade.

By Athena Xu

6/11, 07:00 EDT
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Key Takeaway

  • UAE's Adnoc increased imports of Iraqi Basrah Heavy crude after upgrading its Ruwais refinery to process heavier oils.
  • The upgrade allows Adnoc to export more high-value Murban and Upper Zakum barrels, which sell at a premium.
  • Tanker Spyros transported 1 million barrels from Iraq and also brought Saudi oil for further processing in May.

UAE's Strategic Oil Purchases

The United Arab Emirates (UAE) is strategically increasing its oil imports from neighboring countries following a significant upgrade to its Ruwais refinery. The Abu Dhabi National Oil Co. (Adnoc) has recently purchased a second cargo of Iraqi crude in May, following an initial consignment in April, as per ship-tracking data compiled by Bloomberg. The tanker Spyros transported approximately 1 million barrels from Iraq’s Basrah terminal to Abu Dhabi, with both cargoes being Basrah Heavy crude. Additionally, the same tanker delivered oil from Saudi Arabia to the UAE earlier in May, likely a rare shipment of straight-run fuel oil, which can be further processed at Adnoc’s upgraded plant.

The refinery upgrade allows Adnoc to process heavier and cheaper oils, freeing up more of its high-value crudes, such as Murban and Upper Zakum, for export. These lighter crudes often sell at a premium compared to other regional grades, enhancing Adnoc's export portfolio and revenue potential.

Iraq's Oil Export Negotiations

Iraq, the second-largest oil producer in OPEC, is on the verge of finalizing an agreement to restart oil exports through Turkey. Iraq’s oil minister, Hayyan Abdul Ghani, announced progress in negotiations with the semi-autonomous region of Kurdistan and international oil companies, with an expectation to reach a final understanding within days. The discussions, held in Baghdad, aim to resume production and exports, with revenue to be deposited in an account at the Iraqi central bank. This development is crucial for Iraq's oil sector, which has faced disruptions and requires a stable export route to maintain its economic stability.

OPEC+ and Market Dynamics

OPEC+ recently faced market confusion following its latest adjustments to oil production targets. Despite the group's efforts to stabilize the market, Brent crude prices experienced volatility. Saudi Arabian Energy Minister Prince Abdulaziz bin Salman and other officials reiterated OPEC+'s stabilizing role at an economic conference in Russia, despite the ongoing geopolitical tensions.

Two significant transactions highlight the challenges OPEC+ faces. ConocoPhillips announced a $23 billion acquisition of Marathon Oil Corp., continuing the consolidation trend in the US onshore oil and gas sector. This move aims to enhance efficiency and financial resilience in the face of volatile oil prices. Concurrently, Saudi Arabia raised over $11 billion through a secondary offering of Saudi Aramco shares, priced below the initial public offering level, reflecting the kingdom's ongoing dependence on oil revenue.