Analysis-Record OPEC+ fuel exports blunt group's crude supply cut

By Ahmad Ghaddar

LONDON (Reuters) - OPEC+ has exported a record amount of refined products, blunting the impact of the group's crude output curbs, as members including Saudi Arabia, seek to boost their revenues and market share, according to industry data and analysts.

Supply targets agreed by the OPEC+ grouping of the Organization of the Petroleum Exporting Countries and its allies, focus on unrefined crude production.

This means individual members can increase exports of fuel products - if they have enough refinery capacity – without violating pledges to the group.

Seaborne fuel exports from Gulf OPEC+ members Iraq, Kuwait, Oman, Saudi Arabia and the United Arab Emirates hit at an all-time high in 2024 of 5.51 million barrels per day (bpd) on average, data from Kpler and OilX show, more than 7% higher than the previous year.

"A lot of countries just realise that you can make a lot more money by selling refined products ... rather than exporting crude," Kpler analyst Andon Pavlov said.

There was no immediate comment from OPEC or relevant authorities in the five countries.

The rise in supply of refined fuel means that the overall reduction in supply to global markets is smaller than the headline crude supply agreements indicate, reducing the impact of crude supply cuts, analysts say.

"In other words, in equivalent crude terms, more oil is reaching the market than required," Rystad Energy analyst Mukesh Sahdev said.

The increase in supply of refined products is among the factors that have weighed on prices over the last two years due to weak demand growth from China, analysts say. Oil prices have fallen to around $70 this month, below the level many OPEC members need to balance their budgets.

REFINING INVESTMENT

The Gulf OPEC+ producers have been able to refine more after they invested billions of dollars in their downstream oil industries over the last decade.

Iraq, Kuwait, Saudi Arabia and the UAE increased their domestic refining capacity to 9.1 million bpd in 2023 from 6.5 million bpd in 2009.

OPEC forecasts additional global refining capacity growth of 6.3 million bpd by 2029 driven by the Middle East, Asia Pacific and Africa.

Seaborne crude exports from the five countries fell by 713,000 bpd to 14.54 million bpd in 2024 from the previous year, according to Kpler and Vortexa data. This was a result of the 2.2 million bpd output cut the nations and three other OPEC+ members made last year.

Taking into account the 374,000 bpd rise in oil products exports and the 713,000 bpd drop in crude exports, actual oil shipments to the market from the five countries fell by 339,000 bpd last year according to Reuters calculations based on the Kpler and Vortexa data.