A large amount of Iranian crude oil has poured into China in recent weeks, squeezing imports from other countries, and may make OPEC face more difficulties in tightening global oil market supplies.
According to Bloomberg News, according to the estimates of traders and analysts, China, as the world’s largest crude oil importer, currently purchases nearly 1 million barrels per day of crude oil, condensate and fuel oil from Iran. Traders said that this has affected the sales of popular grades of crude oil such as Norway, Angola and Brazil, resulting in an unusually quiet spot market.
Due to US sanctions, most refineries and traders around the world are reluctant to buy Iranian crude oil, lest they face the consequences of being rejected by the US banking system. However, the rising trend of global oil prices seems unstoppable, making Iranian crude oil at a, particularly favorable price more and more attractive to Chinese buyers, including independent refineries that account for about a quarter of the country’s crude oil processing capacity.
Although due to improved demand and OPEC supply tightening, Brent crude oil is close to US$70/barrel, but Iran’s continued supply or increased supply may affect OPEC+’s action to push up oil prices.
Iran is a member of OPEC, but enjoys exemptions from supply restrictions. However, China’s preference for its low-priced crude oil has squeezed demand for OPEC members such as Angola and other oil-producing countries such as Norway and Brazil, even though the quality of crude oil supplied by these countries is not the same.
Traders pointed out that as of earlier this week, as many as 10 million barrels of Angolan crude oil scheduled for export in April have still not found a buyer, and it should have been sold out as usual. Traders said that due to insufficient demand, crude oil sales in Nigeria and the Republic of Congo are also struggling.
Shipping data show that the three supertankers that originated from the Johan Sverdrup oil field in Norway have drifted off the coast of China for at least two weeks and have not yet unloaded. In February, the scale of North Sea crude oil shipped from Europe to Asia was only 16 million barrels, a four-month low. Traders said that the downward trend may continue in the short term.
Yuntao Liu, an analyst at Energy Aspects Ltd. in London, believes that the current spot market appears to be quite weak. From now to June and July, the West Africa, Norwegian Johan Sverdrup and Brazilian crude oil grades preferred by independent refineries will be difficult to sell.
Iran’s crude oil exported to China includes crude oil directly exported from that country, as well as crude oil originating from Iran and re-branded as Middle Eastern or Malaysian. Data intelligence company Kpler pointed out last week that China’s crude oil imports from Iran this month will reach an average of 856,000 barrels per day, a record high in the past two years.
Traders said that most of them were purchased by Chinese domestic trading companies because private and state-owned refineries tried to distance themselves from Iran. They said that imported crude oil may be temporarily stored in onshore tanks and sold to local refineries at a later date.