With the current virus situation in China prompting them to cut down on oil imports, crude oil output will flow more towards the West benefiting European refiners.
The bulk of crude from the Middle East goes to China and the East but Europe is also a key buyer. With the Chinese refiners cutting down on runs, this demand would well divert to Europe. Although European traders are expecting higher rates on some Middle Eastern grades, they maintain that these barrels are more economical than Russia Urals crude which has similar quality.
A Europe-based trader commented that with Basrah Light at Dated minus $5/b compared to Urals at Dated Brent minus $0.50/b, the switch is a no-brainer.
Around 700k to 800k barrel per day or 10%-15% of Saudi crude exports go to Europe with the biggest demands coming from France, the Netherlands, Poland, Greece and Spain. Around 600k to 700k barrels per day travel from Basrah Light and Basrah Heavy crude to Europe.
In Latin America the trend is seen to mirror this with Brazilian crude sellers switching output to Europe and locally instead of China.
Oman's oil and gas minister has expected this move citing a slowdown in Chinese demand will divert sales of crude to other markets. Oman itself is the most exposed with about 90% of its monthly production slated for China.