Video summary

Markets in Motion | Thursday 17 September

Main summary

Key takeaways

Finance

Finance/Markets-focused Summary

Presenters & roles (Kepler)

  • Rita Anen (Economist, Kepler) – webinar host/introductions
  • Johannes Rael (Senior Crude Oil Analyst, Kepler) – crude oil / refined product implications
  • JP Locketur (LG Natural Gas Analyst, Kepler) – LNG / European gas / demand dynamics
  • Matt Wright (Lead analyst, Freight & Far… / coal & petcoke/cement) – oil tanker freight + coal + related shipping constraints

1) Crude oil: East–West pipeline disruption & YANBU (Yambo/Yanboo) impacts

Event

  • Sept 10 attack hit pumping stations across two regions in Saudi Arabia (attributed to Houthies).
  • The pipeline itself was described as largely intact; damage primarily affected pumping stations.

Key timeline & estimates

  • Pre-attack throughput: ~5.5 mbpd, with ~4.5 mbpd exported via Yambo terminal.
  • No crude loaded from Yambo since Sept 11 (1 day after the attack).
  • Yambo inventories described as “quite thin” due to prior drawdown:
    • ~3–5 days of cover for loadings (relative to “normal rates,” though “not normal” now)
    • ~9 days of refinery runs if no more crude arrives
  • Repair/restore timing: ~4–6 weeks to restore full capacity.
  • Aramco bypass pipeline under construction (near-term relief).
    • Speaker emphasis: repair + bypass is the market’s central driver for near-term crude tightness.

Supply restoration scenarios (“market poll”)

  • Base case: ~50% capacity returns (probability ~50%)
    • Implies Yambo exports ~2.0–2.5 mbpd
  • Relief case: probability ~25%
    • Faster, near-full restoration (not believed likely; based on unconfirmed reports)
  • Escalation case: probability ~25%
    • Further Houthi attacks prolong an outage for months
    • Risks discussed include follow-on attacks if bypass increases flow back toward the terminal
  • Additional Q&A probabilities mentioned:
    • ~30% chance of escalation / re-hit
    • ~20% chance of “relief” returning to a pre-attack baseline

Secondary flows / mitigation

  • Saudi export diversification
    • Use the Strait of Hormuz shuttle service
    • Alternative exports from the Middle East Gulf (references included Ras Tanura-type routing in context)
  • Tanker/shipping constraints were discussed elsewhere (Matt’s freight section), linking logistics bottlenecks to feasible reroutes.

Macro/market implication

  • Crude prices already spiked on the disruption (“news flow”).
  • Johannes argued the global crude balance remains near-tight:
    • Only ~1–2 mbpd deficit “despite so much happening”
  • Implication: market action may still favor downside if negative headlines persist and volumes normalize.

Refined products (Europe): diesel/medium distillates

European supply concerns

  • If Saudi Yambo exports remain offline, Europe faces reduced supply options.
  • Reported rumors:
    • Saudi crude nominations/denominations into Europe paused from late September through October
    • Cancellations mentioned from late September to November

Price/grade spread signals

  • Example cited: “Yan… (Yan swearup)” traded up to ~$20/bbl above North Sea dated (medium density crude differential).
  • Market panic described in the North Sea, with rates rising for:
    • medium density and also light grades

Near-term outlook & alternative sourcing

  • If Saudi restores ~50% capacity, Johannes expects markets to calm and “stronger dip in crude prices.”
  • Imports can be slower to replace; alternatives referenced include:
    • Latin America
    • Additional FPSO supply (e.g., Guyana FPSO referenced)

Diesel export channel (Yanbu/Yasref)

  • Yasref refinery at Yanbu/Yamu: ~200 kbpd diesel output supplying Europe.
  • Unconfirmed reports that the refinery was hit contributed to global/European price spikes and medium-distillate tightness.
  • Russia to Europe not expected to instantly fill the gap (approvals/lead times), and:
    • US exports already maxing out “as much as it can,” making Europe harder to serve quickly.

2) Tanker freight: shuttle capacity constraints + rate regime

Core freight question

  • If Yambo remains constrained, Saudi may reroute more volume via:
    • Strait of Hormuz using VLCC shuttles
    • Then STS (ship-to-ship) in the Gulf of Oman / Gulf of Oman area

Constraint

  • Not mainly vessel availability—rather the STS logistics network:
    • Requires shore-side/transfer support (e.g., Sohar / FGE… / Sohar referenced)
    • These facilities described as at/near capacity

Where rerouting could occur

If STS locations are constrained, options mentioned include:

  • Direct voyages to Asia (less STS burden), or
  • Use STS further afield:
    • Offshore West Coast India
    • Off Malaysia (used in some Middle East crude cases)

Risk discussion (Strait of Hormuz)

  • More incidents “certainly possible.”
  • Speaker view: escalation is difficult because there are already enough vessels transiting with US naval support.
  • Takeaway: risk is tied to logistics and cadence, not only intent.

Long-haul demand / rate direction (numbers cited)

  • If disruption prevents Babel Mandab → Asia flows, long-haul demand shifts toward Suez.
  • August reference: ~1 mbpd (Egypt → Asia) impacted long-haul demand.
  • Freight rates: “Rates only going in one direction: up.”
    • ~$30/bbl from Middle East Gulf → Asia
    • ~$20/bbl from Gulf of Oman → Asia
    • Implied ~$10/bbl premium for that transit

Outlook

  • Potential contractions possible, but from a very high base.
  • Dirty tanker complex expected to remain bullish through remainder of year into 2027, even if the straight (Strait of Hormuz) reopens.
  • Rationale: demand reallocated across routes and inefficiency is “baked into system.”

Sanctions question (Russian vessels / freight)

  • Matt: lifting Russian vessel sanctions is unlikely
  • Reason: sanctions impact a different set of ships than the VLCC constraints discussed (not the same “Afroaxes”).

3) Coal: price surge, drivers (gas-linked demand + supply disruptions)

Drivers

  • Large importers (China and India) reportedly running YoY deficits in imports, yet prices still rise.
  • Main price driver: gas-market volatility
    • Coal positioned as a “second ideal fuel” when gas is unstable
    • European and Australian coal benchmarks linked to gas moves

Supply-side notes

  • No major “steep production cuts” overall, but:
    • Indonesia: regulatory uncertainty about restricting exports (last year’s oversupply caused negative margins)
    • Low water levels disrupt inland barge coal to ports
    • A major Indonesian producer declared force majeure recently

Relative performance / spreads

  • Speaker claim: Indonesian coal outperformed other energy commodities last week due to supply disruptions.
  • Framing:
    • “Coal market trending lower today” (partly gas + freight down)
    • Expectation: FOB prices outperform “Safara” forward (as stated)
  • Asia-Pacific strength: expected from coal burn potential in:
    • Japan and South Korea
  • Power economics support:
    • Oil-indexed gas in “negative territory” (quoted for power economics)
    • Example indicator: spark spread for spot power around ~-$70 to -$100/MWh
    • Despite that, coal remains “in the money,” supporting demand

China met coal / coking coal constraint

  • Issue mainly on metco (metallurgical coal):
    • A producer in the Shi region (high-quality met coal) not returning to expected May capacity
  • New operational factors:
    • tougher security measures at state-owned enterprises
    • higher legal liability for mine managers
    • resulting delays in ramp-up
  • Consequence:
    • China pushing pricing in the seaborne met coal market
    • Chinese offerings described as better net packs than India (India framed as the biggest buyer)

Philippines import dependency

  • Philippines heavily relies on Indonesia coal; Indonesia constraints imply more seaborne thermal imports.
  • Additional structural risk:
    • Government auction/asset handover date: July 2027
    • Legal uncertainty and transition risk could lead to supply losses
  • If supply is lost, import reliance rises during ongoing Indonesia uncertainty.

Implied instruments (referenced indirectly)

  • Coal benchmarks/spreads referenced:
    • “Newcastle” and “ARRA” spread mentioned (expectation: widening)
    • No specific numeric value provided in subtitles.

4) Natural gas & LNG: Europe premium, storage levels, El Niño, and LNG flow to Asia

Europe gas supply/demand expectations

  • Europe expected to remain the premium market for Atlantic basin supply through:
    • rest of September
    • through October (and into October at least)
  • Underground storage expectations:
    • Reach about ~75% (vs prior year level cited contextually)
    • End-of-season storage closer to ~30% (“a bit above where we were last year”)
  • Winter injection season starts from ~83–84% full.

Winter temperature / El Niño

  • El Niño expected to bring a warmer winter in Europe:
    • Lower demand YoY
  • Also warm forecasts in Northeast Asia
  • Procurement implication:
    • Lower demand should ease pressure, but prices still expected high through winter
    • Reason given: constrained supply scenario, including Strait of Hormuz likely closed through end of year at a minimum (elevated LNG/energy costs)

5) LNG Asia dynamics: filling the Qatari gap & what moves JKM/TTF spreads

Near-term supply

  • Statement: no LNG volume making it out of the Middle East Gulf at this point.
  • Prior note: non-Qatari supply covered about ~91% of an approx 10 MT decline in Qatari deliveries to Asia (between July and August).

Can the gap continue into Q4?

  • Expected to continue through remainder of year, supported by:
    • discretionary/delayed maintenance not taken (example: Sabine Pass didn’t take planned maintenance; maintenance typically in June)
    • higher utilization (example: Nigeria LNG higher than expected)
    • new supply ramp: Corpus Christi Stage 3 coming online / additional trains
    • Europe “didn’t restock as much” this summer, leaving optionality for rerouting

Asia demand & what pushes LNG spreads

  • Objective: push JKM back above TTF to move more cargoes to Asia.
  • Sequence described:
    1. Europe stops heavy procurement after injection season ends (around Nov 1)
    2. If early winter is mild, Europe procurement interest falls further
    3. TTF falls relative to JKM, encouraging Atlantic → Asia cargo movement
  • “Game of chicken” across summer:
    • EU vs China timing on procurement lever
    • China constraint: inventories described as ~10% below 5-year average
    • China avoids too aggressive buying to prevent JKM spiking further
  • Spot reference: JKM Asian LNG around $27–$28 (day quoted)
  • Timing for cargo shifts:
    • ARB (Atlantic–Asia LNG route) expected to open around mid-November
    • Then likely see Atlantic cargoes head east to refill inventories

Regional exposure

  • Japan described as less exposed:
    • LNG cut ~5% of portfolio
  • Korea/China described as higher exposure:
    • LNG cut around ~30% cut exposure
  • Inventories in Korea/China hit low levels “bottom of 5-year range” during summer; expected refill.

6) Disclosures / cautions

  • No explicit “not financial advice” disclaimer was present in the subtitles.
  • Multiple statements emphasized unconfirmed reports and uncertainty, including:
    • pipeline repairs
    • Yambo restart
    • refinery strike impacts
    • export nomination pauses

Key numbers & metrics mentioned (quick list)

  • Crude throughput
    • ~5.5 mbpd total; ~4.5 mbpd exported via Yambo (pre-attack)
    • Yambo exports: 0 since Sept 11 loading
    • ~3–5 days of cover for loadings; ~9 days refinery runs (if no arrivals)
    • Repair restoration: ~4–6 weeks
    • Base case exports: ~2.0–2.5 mbpd
  • Freight
    • ~$30/bbl ME Gulf → Asia
    • ~$20/bbl Gulf of Oman → Asia
    • Implied ~$10/bbl premium
  • Coal / power economics
    • “Spark spread” headline for spot power: ~-$70 to -$100/MWh (negative)
    • coal still economic vs oil-indexed gas
  • Gas / LNG
    • Europe storage: ~75% mid/through; ending ~30%
    • Qatari decline to Asia: ~10 MT; non-Qatari covered ~91%
    • JKM reference: ~$27–$28
    • ARB route opening: mid-November
  • Weather
    • El Niño expected warmer winter, linked to storage/procurement assumptions

Explicit methodology / framework (as described)

No formal valuation model or step-by-step investing framework is presented. However, a scenario-based probability framework is used for oil restoration:

  • Build base/relief/escalation cases for Yambo capacity restoration:
    • Base: ~50% restored
    • Relief: near-full restoration quickly
    • Escalation: additional attacks prolong outage
  • Apply probabilities to infer:
    • expected throughput/export volumes
    • downstream effects on global crude balance and price direction

Mentioned tickers / assets / sectors

  • Sectors/instruments: crude oil, diesel/refined products, LNG, natural gas (TTF vs JKM), thermal coal, metallurgical coal/coking coal, tanker freight rates (VLCC/STS logistics).
  • No specific stock tickers/ETFs/individual bonds were cited.

Sources / presenters

  • Rita Anen (Economist, Kepler)
  • Johannes Rael (Senior Crude Oil Analyst, Kepler)
  • JP Locketur (LG Natural Gas Analyst, Kepler)
  • Matt Wright (Freight & Far / coal/petcoke/cement analyst, Kepler)

Original video