A year on, Dar Blend crude finally makes a comeback

The first Dar Blend cargo will be loading onboard the Toska Suezmax tanker on Feb 23, ending weeks of speculation around its return as well as a one-year absence of the favored VLSFO-producing heavy sweet crude.

The resumed Dar Blend is bearish for Asian VLSFO markets which have been broadly pressured over the past couple of months by ample supplies and sluggish bunkering demand.

Exports of heavy-sweet Dar Blend from Sudan by destination country (kt)

Source: Kpler

This cargo was sold to BB Energy at a discount of about $6.50 to North Sea Dated – the lowest in nearly seven years (Argus). On the one hand, the deep discount on the cargo reflects a relatively weak VLSFO market. On the other hand, it also suggests traders are cautious of the quality of the initial Dar Blend cargoes given that the pipeline has been offline for a year and could likely result in some product contamination as it is restarted.  

Moreover, Dar Blend suppliers will be returning to a market with new and competing streams of oil used in VLSFO production like heavy sweet Meleck crude from Niger and Dangote’s LSSR which have recently made a comeback amid issues at its giant RFCC. Interestingly, the recent swing of Meleck cargoes to refiners in Italy underscores the relatively weak Asian VLSFO markets where there is no shortage of supply.

Exports for Meleck crude by destination country (kt)

Source: Kpler and Argus Media

Traditionally Dar Blend exports were shipped to the UAE’s Fujairah as well as the Singapore and Malaysia bunkering hubs for VLSFO production. However, with the Montfort refinery in Fujairah now offline, Dar Blend exports are likely to flow mostly Southeast Asia into Vitol’s ATB Refinery in Tanjung Pelepas and nearby floating storage units. Vitol also operates the Fujairah Refinery in the UAE which will mean some heavy sweet barrels, like Dar Blend, will still continue to be delivered into the Middle East bunkering and trading hub.  

While resumed Dar Blend exports are bearish for VLSFO markets, they are unlikely to tank them. Instead, the restarted flows are likely to displace less economical feedstocks used in VLSFO production like Argentina’s Escalante and Chad’s Doba Blend. Having said that, the situation in Sudan remains volatile and disruptions will not come as a surprise. We will be keeping a close eye on whether Dar Blend exports from there will continue to flow.

Want market insights you can actually trust?
‍

Kpler delivers unbiased, expert-driven intelligence that helps you stay ahead of supply, demand, and market shifts. Our precise forecasting empowers smarter trading and risk management decisions - backed by the most accurate oil price predictions two years running.

Unbiased. Data-driven. Essential.

Trade smarter. Request access to Kpler today.