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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    The flow of Iranian oil to China undermines OPEC's efforts to control the market

    Rocky
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    The flow of Iranian oil to China undermines OPEC's efforts to control the market Empty The flow of Iranian oil to China undermines OPEC's efforts to control the market

    Post by Rocky Wed 17 Mar 2021, 7:56 am

      The flow of Iranian oil to China undermines OPEC's efforts to control the market

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    The flow of Iranian oil to China in recent weeks has crowded imports from other countries, which threatens to complicate the efforts of the "OPEC +" alliance and undermine its efforts to tighten supplies in the global market.
    China, the world's largest importer of crude oil, currently buys nearly 1 million barrels per day of crude oil, condensates, and sanctioned fuel oil from Iran, according to estimates by traders and analysts.
    Traders said that this Iranian oil is replacing preferred grades from countries such as Norway, Angola and Brazil, and is leading to an unusually quiet spot market.
    Most traders and refiners around the world are reluctant to buy Iranian crude due to the US sanctions, which could lead to repercussions, such as a cutoff from the US banking system.
    However, the seemingly unstoppable rise in global crude oil prices is making Iranian oil at a very low price increasingly attractive to Chinese buyers, including independent refiners, which account for about a quarter of the country's crude oil processing capacity.
    While the global benchmark Brent crude is trading at around $ 70 a barrel due to improved demand and tighter supplies from OPEC +, the continuation or increase of Iranian flows may hinder the coalition's efforts to continue raising prices.

    Iran's cheap crude competes with OPEC countries

    It is reported that Iran is a member of the Organization of Petroleum Exporting Countries, but it is exempt from the supply restrictions. However, China's preference for its cheap crude is displacing demand from OPEC countries such as Angola, as well as other producers such as Norway and Brazil, despite the fact that the quality of all these countries' oil is not identical.
    According to traders, up to 10 million barrels of Angolan oil scheduled to be exported in April were still without buyers until earlier this week, compared to a month in which these shipments usually have been sold by now.
    Traders added that oil from Nigeria and the Republic of Congo also encountered difficulties due to the lack of desire to buy.
    Shipping data shows that three supertankers carrying oil from the Norwegian "Johan Sverdrup" field have been floating off China for at least two weeks without being unloaded.
    Market participants said that only 16 million barrels of North Sea crude left Europe for Asia in February, the lowest amount in four months, and the downward trend is likely to continue in the short term.

    A leap in the export of Iranian oil to China

    “With the increase in flows from places like Iran, and all other degrees of arbitrage to China now closed, the spot market looks really weak, and between now and June,” said Yuntao Liu, an analyst at Energy Aspects, which is based in London. Until July, it will be very difficult to sell favorable items such as West African ores, Norway's Johan Sverdrup ores, and Brazilian materials.
    He states that the Chinese special players in the oil industry are often described as "teapot refineries".
    It is worth noting that Iranian oil flowing to China is a mixture of barrels that are transported directly from the Gulf, in addition to Iranian shipments whose trademark has been changed to become Middle Eastern or Malaysian degrees.
    Data intelligence company Kepler said last week that China's imports of crude oil from Iran will average 856,000 barrels per day this month, the highest level in nearly two years.
    Traders said that most of this oil is bought by local Chinese commercial enterprises, as private and state-owned refiners try to distance themselves from dealings with the state subject to US sanctions.
    They added that these supplies will likely be kept temporarily in tanks before being resold to local refineries at a later date.
    These special processors, which are mostly based in Shandong Province, are known to work on refining Iranian and Venezuelan crude into fuel, and using low-quality sludge fuel oil as feedstock for their units.
    These increased Iranian flows appeared as the administration of President Joe Biden tried to revive the nuclear deal with Tehran.
    Iran was exporting about 2.5 million barrels per day of oil before the sanctions were imposed in 2018. Ed Morse, head of commodity research at Citigroup, said in a note published in January that Iran is starting the year as a strong alternative player to higher oil prices.
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