"Bloomberg": Saudi Arabia and Iraq have been supplying Europe with crude oil every day since the beginning of July this year.

Bloomberg reported that Saudi Arabia and Iraq have been supplying Europe with crude oil that is helping the continent’s refiners to overcome the shortage it is experiencing.

The agency said more than a million barrels of crude oil entered Europe daily from the Middle East during the first three weeks of July via a pipeline crossing Egypt, and volumes are almost double what they were a year ago, according to ship-tracking data compiled by Bloomberg.

Russia’s military operation in Ukraine provoked a backlash from European companies, many of which decided to stop doing business with Moscow. However, the so-called “self-punishment” raised the question of where the Europeans would find alternative sources.

Supplies from Saudi Arabia dominate pipeline flows, but Iraq is also increasing supplies. The companies can either ship oil via the SuMed pipeline that crosses Egypt, or if small enough ships are available, the oil can go directly through the Suez Canal to the Red Sea. Deliveries to Iraq do the latter.

Pipeline supply volumes increased from about 800,000 barrels a day in the previous month to the highest level since a brief increase during free production in April 2020.

In addition to these flows, in the first three weeks of July, about 1.2 million barrels per day were shipped from the Persian Gulf to the channel, mainly from Iraq.

This could bring the total flow from the Middle East to Europe to 2.2 million barrels per day, an increase of almost 90% since January, the last month before the start of Russia’s military operation in Ukraine.

The shift comes as Russian crude oil volumes increase in the opposite direction, from Russian ports on the Baltic and Black Seas to buyers in India and China. This is due to the abundance of cheap barrels in the two Asian countries at a time when fuel prices were rising.

“Now we are seeing some of those barrels being diverted from Asia to Europe,” Giovanni Stonovo, commodities analyst at UBS Group AG, said of Middle East oil. This is happening as Europe reduces purchases of Russian barrels and Russia instead sends its oil to the big market, Asia.

Bloomberg says there is no certainty that flows from the Middle East to Europe will be sustainable. At the end of this year, the EU ban on Russian oil should come into force. Part of the package of sanctions includes a ban on ensuring the supply of Russian goods to any buyers.

And if the insurance ban affects overall exports, as the US Treasury fears, it could again increase competition for supplies from the Middle East.

This week, a Saudi offshore oil tanker company chartered a supertanker to carry crude oil from the Mediterranean to Rotterdam. This is a rare contract for a tanker company in the kingdom that highlights the change in flows.

The reversal of barrel movement is also a reminder of the logistical problems that could arise when buyers stop buying Russian oil. Cargoes must travel long distances, increasing the use of the world’s oil tanker fleet.

Record profits for supertankers capable of carrying two million barrels of crude rose to their highest level since April this week, although they are still relatively weak by historical standards.

According to Lars Barstad, CEO of Frontline Management AS, Europe’s demand for Middle Eastern oil is boosting what’s called a mileage, a measure of demand that multiplies the quantity of goods by the distance they are delivered.

Barstad, who heads the management company of one of the world’s largest tanker owners, said: “Mile imports into the European Union have at least doubled … and miles per tonne of Russian oil has tripled, if not more.”

Source: Bloomberg.