Bloomberg
Iran’s oil boom in China undermines OPEC’s efforts to intensify supply
(Bloomberg) – The flood of Iranian oil that has been blowing up in China over the past few weeks is pushing up imports from other countries and threatening to hamper the OPEC + alliance’s efforts to intensify supply in the world market. , according to estimates by traders and analysts, currently buys nearly 1 million barrels per day of sanctioned crude, condensate and fuel oil from the Persian Gulf nation. Traders said it was displacing the favorite grades of countries such as Norway, Angola and Brazil, leading to an extraordinarily quiet place. Most refineries and traders around the world are reluctant to buy Iranian crude oil due to US sanctions, which could have consequences such as being cut off from the US banking system. The seemingly unstoppable increase in global crude prices makes the sharply discounted Iraqi oil increasingly attractive to Chinese buyers, including its independent refineries, which make up about a quarter of the country’s crude oil processing capacity. While Brent trades the global benchmark, it is $ 70 a barrel due to improving demand and the tighter supply of OPEC +, a continuation or increase in the Iranian flow could stimulate the alliance’s efforts to raise prices. Iran is a member of the Organization of Petroleum Exporting Countries, but is exempt from the supply restrictions. However, China’s preference for cheap crude oil displaces 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 the same. About 10 million barrels of Angola oil, according to traders, were April exports for buyers even earlier this week without buyers, compared to a normal month when such loads would have already been sold out by now. The traders said grades from Nigeria and the Republic of Congo were struggling due to lack of buying interest. Three supertankers transporting oil from the Johan Sverdrup field in Norway have been drifting from China for at least two weeks without unloading it. Only 16 million barrels of North Sea crude left Europe for Asia in February, at least in four months, with the downward trend likely to continue in the short term, market traders say. “With increasing flow of places like Iran, and all the other grades’ arbitrage to China currently closed, the spot market looks really weak,” said Yuntao Liu, an analyst at London Energy Aspects Ltd. Between June and July, the teapots’ preferred grades such as West Africa crude oil, Johan Sverdrup from Norway and Brazilian crude oil will be difficult to sell. Chinese independent processors are often described as teapot refineries. The Iranian oil flowing to China is a mixture of barrels transported directly from the Persian Gulf, as well as Loads of Iranian origin that are marked as Middle Eastern or Malaysian degrees. Data information firm Kpler said an average of 856,000 barrels per day last week, the most in nearly two years, averaged 856,000 barrels. well-known refiners try to distance themselves from dealing with the US-sanctioned nation. It is likely that these supplies are temporarily kept in tanks on the land before being later sold at local refineries, they say: Sheikh Lays claims that Oil Cargo US says is from Iran These private processors, which are mostly based in Shandong. It is known that Iranian and Venezuelan crude oil are refined into fuel, and that they use low-quality acidic oil as feedstock for their units. The growing Iranian flow is taking place as President Joe Biden’s government seeks to revive a nuclear deal with Tehran. . The Persian Gulf supplier exported about 2.5 million barrels a day of oil before the sanctions were first imposed in 2018. Iran is starting the year as the “biggest wildcard” for oil prices, said Ed Morse, head of commodity research at Citigroup Inc., in a comment in January. For more articles like this, feel free to visit us at bloomberg.com. Sign up now to stay ahead of the most trusted business news source. © 2021 Bloomberg LP