European crude oil traders were weighing up the potential impact of Hurricane Harvey on the 

North  Sea and  West African crude markets Monday, with a potential short term alteration to 

trade flows providing much food for thought. 

While Harvey's impact has been most keenly felt on product markets, with production reduce

d at refineries along the US Gulf Coast and the temporary closure of the key Colonial Pipelin

e,  it also had the potential to reduce US crude exports in the short-term from the US Gulf Co 

ast to areas such as North West Europe. 

"Pipeline infrastructure has been impacted domestically in the US, along with export infrastru 

cture for crude and products," said a North Sea trader. 

The recent strength in the Brent complex, and the resulting widening of the Brent-WTI future

s spread, had led to expectations of a big increase in US exports to Europe, which would hav

e likely put downward pressure on differentials for North Sea grades. 

The  front-month Brent/WTI futures spread was assessed at $5.90/b by Platts on August 29, 

the widest since August 13, 2015, before retreating slightly to $4.91/b Friday. 

"We were expecting larger-than-normal WTI imports into NWE and a lot of that will be delaye

d due to export infrastructure being non-operational," said the trader. 

Traders also said the potentially bullish impact of a reduction in US flows to Europe would be 

countered by  the bearish impact of reduced refinery runs as NWE refineries underwent Autu 

mn turnaro unds. 

"There is maybe a bit less oil [coming from the US to NWE] but not a significant amount," said 

a  second  North  Sea  trader.  "There is no shortage of oil at the moment and [lower] refinery 

runs are having the biggest impact. So I don't see any material loss in oil coming this way." 

While  refinery  closures  would  normally  be  bearish  for crude markets, as the USGC is not 

typically  a  large importer  of  North  Sea   grades the potential negative impact on North Sea 

would appear to be limited from that perspective. 

As  a  result  of this,  the impact on the sour crude market was likely to prove more significant 

than on the sweet market. 

"The  US  Gulf Coast imports more sour than sweet so this will impact sour more. Light sweet 

barrels  will  continue  to flow to the US East Coast as normal, maybe even more than before 

with the current [high] margins," said a third North Sea trader. 

According  to  Wes t African crude traders, the impact of Harvey on Nigerian differentials was 

mixed, with the temporary drop in US refining capacity being weighed against the potential for 

already  produced  US  barrels  to  come to NWE and compete for market share with Nigerian 

barrels. 

"The margins [on WAF crude] are good because you have four million b/d capacity offline bu

t you have other refineries running at capacity -- so that means a net loss for crude capacity 

overall, so WAF grades are coming under pressure," said a WAF trader. 

Another  WAF  trader  said  some  of  the  displaced US crude, unable to be used in the Gulf 

Coast,  was  also  likely  t be finding its way to Europe and providing competition for Nigerian 

crudes in particular. 

"US crudes are under pressure and that will push them into Europe to clear," said the trader. 

"I  think  the  refinery  damage  is  more  long-lasting than export infrastructure and it seems 

[some] European refineries are happy to wait for that."