Asian refiners see little room for Iranian oil, leaving China as key buyer after US waiver
By Nidhi Verma, Siyi Liu and Florence Tan
NEW DELHI/SINGAPORE, June 23 (Reuters) – A temporary exemption from U.S. sanctions on Iran’s oil sales is unlikely to attract orders from well-stocked Asian refiners, with independent Chinese refiners remaining the main buyers, trade sources and analysts said.
The United States on Monday allowed the sale of crude oil, petroleum products and petrochemicals originating from Iran until Aug. 21, easing decades-old sanctions as it moves toward an eventual peace deal with Tehran.
Hit by supply disruptions due to the blockade of the Strait of Hormuz since March, Asian refiners have been aggressively buying oil from the United States, Russia, Africa and Latin America.
But the US-Iran interim peace deal reopens the strait and allows the outflow of oil that has been trapped for months, putting pressure on global oil markets. Middle Eastern producers are also now pressuring buyers to increase volumes contracted under annual deals, sources said. [O/R]
One of the sources said that the National Iranian Oil Company is waiting for offers from Asian refiners to purchase its oil. An industry source close to NIOC said it was calculating delivery prices of rival crude oils to China for possible spot sales. Another source said Iranian oil dealers have temporarily stopped offering cargo to China’s eastern Shandong province while they evaluate demand from other countries.
“Most of the oil companies are closed until August. We were not expecting a waiver and had already bought whatever was in the market,” said a source at an Indian refinery. “We actually booked crude cargo for August at a premium.”
Sumit Ritolia, chief analyst at ship tracking firm Kpler, said: “With India’s crude oil supply comfortable until August, the biggest beneficiary of any sanctions relief for Iranian oil is likely to be China, which requires crude oil for both processing and strategic stockpile replenishment.”
Three Asian refiners that last bought Iranian oil about a decade ago said they were buying enough crude for now, but sanction-free supply was becoming affordable.
Besides compliance challenges, timing is also very tight and Japanese refiners will need to conduct trial runs before resuming purchases, Japanese oil sources said.
IRAN INCREASED ITS EXPORTS
Buyers are also cautious due to uncertainty around sanctions relief, Washington’s policy stance and difficulties in dealing with banking and payment issues, sources and analysts said.
“Iran will use this opportunity to send as much cargo as possible from the Gulf,” ship tracking company Vortexa said, adding that Iran’s crude oil in the water increased by 6 million barrels in the last 48 hours.
