China Ramps Up Iran Oil Purchases
China ramped up its buying of cheap Iranian crude last month after independent refiners were granted additional import quotas for 2021.
The nation imported almost 18 million barrels in November, equivalent to about 600,000 barrels a day, according to market intelligence firm Kpler. That’s up almost 40% from October and the biggest volume since August. Flows may be limited in the coming months, however, in part due to a broader crackdown on independent refiners and reduced demand resulting from virus restrictions.
China’s independent refiners, known as teapots, were set for a buying spree before the end of the year as they sought to use new import allocations they received in mid-October. That put Russian ESPO oil from the Far East, which usually takes less than a week to be shipped, and Iranian crude stored on ships off China and around Singapore and Malaysia in the spotlight.
The overall volume of crude and condensate stored at sea off key Asian regions fell to the lowest level since September as of Dec. 9, according to Kpler, which estimates that more than half of the oil in floating storage is from Iran and Venezuela. Traders say Iranian cargoes have been sold at a discount of at least $4 a barrel to the ICE Brent price.
The import figures from Kpler are at odds with official Chinese data, which indicate the nation hasn’t taken Iranian oil since December 2020. Supplies have often been re-branded as originating from Oman and Malaysia in the past.
Teapots have the flexibility to purchase cheap Iranian oil because many don’t have long-term deals with other Middle Eastern producers, unlike other Asian refiners. The independents buy cargoes via third parties that normally don’t own any assets in America, although China has opposed U.S. sanctions on Iran and accused Washington of reaching beyond its jurisdiction.
Still, relations are tense between the world’s two largest economies. Beijing this month threatened the U.S. with retaliation after Washington declared a diplomatic boycott of the Winter Olympics. The move is largely symbolic, considering the Covid-related restrictions officials would face in China.
The November spree likely marks the end of elevated buying for now. Flows are set to be subdued until late February following the Lunar New Year holiday and the Beijing Winter Olympics, which end on Feb. 20, according to Yuntao Liu, an oil analyst at Energy Aspects in London. China’s oil demand in early 2022 will have very limited upside, he added.
In the physical spot market, there are already signs of weakening for February loading cargoes. Spot premiums of ESPO crude -- one of the grades favored by teapots -- slipped to the lowest since August amid a crackdown on private refiners in China’s oil refining hub of Shandong province.
What do you think? We’d love to hear from you, join the conversation on the
Rigzone Energy Network.
The Rigzone Energy Network is a new social experience created for you and all energy professionals to Speak Up about our industry, share knowledge, connect with peers and industry insiders and engage in a professional community that will empower your career in energy.
- Falcon Oil Declares Commercial Flow Test Results for Shenandoah Well
- Macquarie Strategists Expect Brent Oil Price to Grind Higher
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- Pennsylvania County Joins List of Local Govts Suing Big Oil over Climate
- UK Oil Regulator Publishes New Emissions Reduction Plan
- PetroChina Posts Higher Annual Profit on Higher Production
- US, SKorea Launch Task Force to Stop Illicit Refined Oil Flows into NKorea
- McDermott Settles Reficar Dispute
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- USA Commercial Crude Oil Inventories Increase
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Oil Demand Outpaces Expectations, Testing Calculus on Peak Crude
- House Passes Protecting American Energy Production Act
- TotalEnergies Restarts Production in Denmark's Biggest Gas Field
- USA Oil and Gas Job Figures Jump
- Republican Lawmakers Say IEA Has Abandoned Energy Security Mission
- Blockchain Demands Attention in Oil and Gas
- Houthis Warn Saudi Arabia of Retaliation If It Backs USA Attacks
- Macquarie Sees USA Oil Production Exiting 2024 at 14MM Barrels Per Day
- Summer Pump Prices Set to Hit $4 a Gallon Just as Americans Hit the Road
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Equinor Makes Discovery in North Sea
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension