A few days ago, the Maran Apollo, a 1,100-feet long oil tanker, left the U.S Gulf of Mexico for the Chinese port of Rizhao hauling a cargo of two million barrels of U.S. crude. Sitting for almost two months, the supertanker held demand-less crude during the coronavirus outbreak. This crude sitting on the tanker is known as medium-heavy sour crude and is now in high demand because of its higher content in sulfur and denseness. Sour crude is typically from Canada and the U.S. Gulf Coast whereas West Texas Intermediate (WTI) is a “sweet” crude oil. WTI, which is typically lighter and is less expensive to produce. Known as “sour” which is typically undesirable for both processing and end-product quality, it’s the kind of oil that Saudi Arabia and its allies produce. Urals of Russia and Arab Light from Saudi Arabia are normally two of the most widely consumed in today’s market, but crude is in increasingly short supply due to record output cuts by the two nations and their allies.
“Deep OPEC+ cuts and demand recovery have tightened balances, and this has been reflected in improvements in physical differentials,” said Bassam Fattouh, director of the Oxford Institute for Energy Studies. “But the recovery has not been even, with medium-sour crudes faring better than light-sweet crudes.”
As the oil market continues to tighten, OPEC is now able to increase the prices it charges to refiners. Saudi Aramco, a state-owned oil company is now selling “Arab Heavy” at similar price compared to its top product Arab Light. A sign of the strength of the medium-heavy sour grades. Medium-heavy sour crude is trading at a premium to benchmarks and the need for immediate delivery is commanding premiums to forward contracts.
https://www.thebalance.com/the-basics-of-crude-oil-classification-1182570
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