LatAm’s new barrels arrive as eastbound arbs shut

Brazilian pre-salt production continues to accelerate, but the market is becoming increasingly driven by destination economics. With Eastbound arbs now shut, the next question is not where Brazilian barrels go, but when the economics turn back in their favour.

‍

Executive summary

LatAm crude/co supply is rising into a weaker clearing market, with Brazil’s pre-salt ramp already adding close to 400kbd ytd and regional supply expected to increase by roughly 1.5Mbd by 2027. At the same time, cheaper Dubai-linked barrels and higher LatAm-to-East freight have shut Eastbound Mero/Tupi arbs, keeping pressure on implied netbacks. The key swing factor to watch is China, where stronger refinery runs, restocking or SPR buying could reopen the arb and improve sellers' pricing leverage.

Brazil crude/co supply forecast (kbd)

Source : Kpler

‍