Vitol may have just pointed a Doba cargo towards Malaysia after hitting a wall of indifference in Northwest Europe, but I wouldn’t over-interpret the move.

That is because refinery planning at Sarroch already has a Dalia waiting to go in — Kapodistrias 21 — and a Meleck on the way — Ottoman Sincerity.

That operational bottleneck, however, masks what is quietly turning into one of the cleanest arbitrage plays in the Mediterranean basin.

The Macro Catalyst: SUMED Flow Reversals & The Sidi Kerir Pull

Sonatrach has pulled back on exporting its indigenous 0.3% naturally sweet straight-run fuel oil out of Skikda, opting instead to keep it captive on coastal shuttle routes to feed its Augusta refinery in Sicily.

Simultaneously, Red Sea transit avoidance has forced Aramco and Gulf producers to maximise throughput via the East-West / Yanbu pipeline and the Ain Sukhna–Sidi Kerir (SUMED) link.

This has created a massive influx of Asian-chartered VLCCs — principally fixed by Japanese and South Korean majors including Eneos, Idemitsu, GS Caltex, Hyundai and SK Energy — loading out of Sidi Kerir on the Mediterranean coast before making the long backhaul voyage around the Cape of Good Hope.

Every single one of these Asian VLCCs requires massive bunker stem volumes before exiting the Med into the Atlantic / Cape lanes.

Which ones have not been retrofitted with a scrubber is crucial to continually understand here as that trade gains traction.

With Algerian 0.3% straight-run tied up inside Sonatrach’s system, a structural low-sulphur bunker vacuum has opened in the Central / Eastern Mediterranean corridor.

1 Million Barrel Freight: The West African Heavy Sweets Advantageous for the Mediterranean 0.1% Bunker Market

Angola – Pazflor, sulphur 0.34%

Chad via Cameroon – Doba, sulphur 0.10%

Niger via Benin – Meleck, sulphur 0.30%

Baltic TD20 — 130kt WAF to UKC — is the exact paper instrument to lock in the freight leg.

Because TD20 matches standard 1-million-barrel Suezmax parcel sizes of approximately 130,000–140,000MT, you can hedge the Atlantic-to-Europe waterborne exposure without liquidity friction.

For the purposes of this exercise, I have used the last exchange print of 130,000MT x Worldscale 260.0.

Beware, it was 130,000MT x Worldscale 177.5 the week prior.

There is therefore immense volatility that requires mitigating even without this trade route being anywhere near a war zone.

The Blueprint: Structuring the 4-Leg Integrated Arb

For a standard 1,000,000 bbl / 130kt–140kt Suezmax movement, managing price and freight volatility requires a multi-market hedge structure.

1. Crude Sourcing

Lift Meleck from Cotonou or Doba from Kribi FOB against Dated Brent.

2. Freight Hedge – Baltic TD20

Hedge the 130kt Suezmax movement via Baltic TD20 FFAs on WAF–UKC.

At current levels of approximately WS 260, Cotonou holds a USD 0.75–0.80/bbl freight advantage over Pazflor / Kribi.

Discharge into Algeciras / Sines captures a favourable freight differential versus the TD20 terminal basis, landing physical freight at approximately USD 4.53/bbl for Meleck.

3. The Dual Paper Split – Light vs. Heavy

60% Light Ends: Short 600 lots of ICE Brent / Gasoil to lock in distillate margins.

40% Residue Yield — approximately 56,000MT: Short Rotterdam / Med 0.5% VLSFO swaps, monetising the heavy end directly against marine fuel derivatives rather than crude flat price.

4. Physical Off-take & Processing

The Western Gate — Algeciras / CEPSA / MOEVE: Minimal freight drag; strip light ends and route residue straight into the Gibraltar Strait bunker pool.

The Central Hub — Sarroch / Vitol or ISAB / Trafigura: Top the crude; blend sweet atmospheric residue with local 0.1% gasoil and deliver via STS into the Malta / Central Med offshore bunker market.