Substituting Arab Light crude in the European refining diet

• European refineries have been informed that some September-loading crude cargoes from Yanbu will be cancelled due to the Saudi E/W pipeline outage which does not have a clear timeline of restart.
• Orlen was the first European integrated oil firm to be seen issuing tenders to procure replacement barrels. They have been heard to have purchased North Sea grades while tenders are out for arb alternatives.
• The scramble for barrels will affect the European refineries far more than the Eastern refineries as Saudi Aramco would divert barrels to Ras Tanura given heightened risks from the Red Sea side. The unpalatable option would be to ship Arab crude from Ras Tanura to Europe via the Cape of Good Hope, but this would add about 15-16 days to the voyage plus an incredibly expensive freight cost.
• Arab Light is a medium sour crude with an API of 33. Other medium crudes that should benefit from this would be Johan Sverdrup and Grane in the North Sea, KEBCO and Kirkuk, Mars and a host of WAF medium grades such as Egina, Forcados, Escravos and Mostarda. South American grades such as Liza, Payara and Unity Gold and Brazilian grades would also be possible alternatives.
• WTI and CPC, which are more readily available, will not be entirely suited to substitute Arab Light on a 1:1 basis as the residue yield is too little to load up the secondary units in these refineries. Increased light barrels in the diet will need to be blended with heavy barrels to proxy a medium crude, without which the refinery will produce even less distillates.
• Meanwhile, the arb remains open for WTI vs Forties into NWE, with Forties at Oct Dated+$15/bbl and TD25 at WS 507.
• Medium cracking margins for Forties into NWE having been falling since FOB premiums and freight costs are rising rapidly. However, given the short diesel supply in Europe, we anticipate product cracks to keep rising as well to signal refineries to keep running if they can find the crude.

(Simple crude yields for Arab Light crude replacements)

(Gasoil vs residue cuts by crude grade)

(Forties cracking margin in NWE falling)

(Landed prices for light crudes into NWE)

(Landed prices for medium crudes into NWE)

About the Author
 June Goh | Senior Oil Analyst, Sparta Commodities
June is a senior oil market analyst at Sparta specialising in global crude trade flows and refining economics across Asia and Europe. Her analysis is regularly cited by Bloomberg, the Financial Times, and Reuters. With a significant following in the energy community on X (@JuneGoh_Sparta), June’s insights are a staple for institutional traders navigating regional market shifts.
Connect: LinkedIn / X

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