(Bloomberg) – The torch of Iranian oil that has been leaking into China in recent weeks is fueling exports from other countries and threatening efforts by the OPEC + alliance. work harder to tighten supply in the global market.
China, the world’s largest crude oil importer, currently buys nearly 1 million barrels per day of approved crude, condensate and fuel oil from the Gulf of Persia nation, according to estimates from consumers. traders and analysts. That removes favorite rates from countries such as Norway, Angola, and Brazil, traders said, and leads to an unusually quiet spot market.
Most refiners and traders around the world are reluctant to buy Iranian crude due to U.S. sanctions, which could lead to reactions such as being cut from American banking system. However, the seemingly unstable rally in global crude prices is making significantly reduced Iranian oil increasingly attractive to Chinese consumers including the refineries or -dependent, which makes up about a quarter of the country’s raw processing capacity.
While the crude Brent benchmark trades close to $ 70 per barrel due to better demand and tighter supply from OPEC +, a continuation or rise in Iranian flows could hamper alliance efforts to raising prices.
Iran is a member of the Organization of Petroleum Exporting Countries, but is exempt from supply restrictions. However, China’s choice for its cheap crude eliminates demand from OPEC countries such as Angola as well as other producers such as Norway and Brazil – although the quality of oil from all these countries is not equal.
As many as 10 million barrels of Angolan oil due for export in April were still without customers as they were earlier in the week, according to traders, compared to a normal month when such loads would now be sold. Rates from Nigeria and the Republic of Congo have also struggled due to a lack of buying interest, the traders said.
Three supertankers carrying oil from Johan Sverdrup’s field in Norway have been sailing off China for at least two weeks without getting rid of it, shipping data show. Only 16 million barrels of North Sea crude left Europe for Asia in February, the lowest level in four months, with the downward trend continuing in the short term, officials said. traders involved in the market.
“With more streams from places like Iran, and arbitrage of other levels to China currently closed, the spot market is looking very weak,” said Yuntao Liu, an analyst with Energy Aspects Ltd. based in London. “Between now and June to July, teapots like West African bark, Norway’s Johan Sverdrup and Brazilian peels will be hard to sell. “China’s private players in the oil industry are often described as teapot refiners.
The oil from Iran that flows into China is a mixture of barrels shipped directly from the Persian Gulf, as well as consignments of Iranian origin that are rebranded as Middle Eastern or Malaysian standards. Chinese crude imports from the country will average 856,000 barrels per day this month, the highest number in nearly two years, data intelligence firm Kpler said last week.
Most of it is bought by domestic Chinese trading houses, traders said, while private and state-owned refineries try to distance themselves from dealing with the country controlled by the United States. SA. These stores are likely to be kept temporarily in onshore tanks before being resold to local refiners at a later date, they said.
These private processors, based mainly in the Shandong region, are known to modernize Iranian and Venezuelan crude fuels into fuels, and use low-grade slow-fuel oil as a feedstock. aonadan aca.
The Iranian currents are happening as the administration of President Joe Biden seeks to revive a nuclear deal with Tehran. The Persian Gulf supplier exported about 2.5 million barrels per day of oil before the sanctions were first imposed in 2018. Iran is starting the year as the “largest wildcard ”For oil prices, said Ed Morse, head of product research at Citigroup Inc. in a January note.