Daily Energy Report
Iraq oil exports to India, China’s Iran oil imports, OPEC+ export less to US, Peak oil demand, Asia loves gas, Russian fuel oil & VGO, US Fuel oil, S, Canada carbon tax, EU oil insecurity, and more.
Chart of the Day: Iraq’s oil exports to India remain within the historical range
Summary
Figure (1) above shows Iraq’s exports of crude and condensates to India. Despite the decline in the first half of 2023 and the recent increase, exports remain within historical boundaries.
EOA’s Main Takeaway
India is the main traditional customer of Iraq’s oil. Despite the decline in the first half of 2023 as India imported more Russian crude, Iraq exports to India recovered recently as Russian crude became more expensive. Regardless, looking at the previous five years, Iraq's exports to India remain within the historical boundaries, indicating that Indian refineries need certain crude qualities. Lifting the sanctions on Iran might make India import Iranian oil at the expense of Iraqi oil. We will not know the impact until after the fact.
Story of the Day
Kpler: Iran has overtaken Saudi Arabia as China’s top seaborne oil supplier in October
Summary
EOA’s Main Takeaway
Kpler had to do a lot of research to get the Iranian data. A large portion of Iranian oil exports don’t go to China directly. The work requires following ship-to-ship transfers along the route to be able to collect the data. Please follow Homayuon on on X @hfalakshahi and @Kpler
The question is: why is most of Iran’s oil going to China? Because, under sanctions, Iran wants to deal with companies that can give them cash or do barter deals. Otherwise, importers must keep the money in escrow accounts until the sanctions are lifted. Independent Chinese refiners have no problem importing Iranian oil directly or indirectly because they do not have any foreign operations. No one can punish them. That is not the case for the Chinese oil majors who will buy the Iranian oil after it has been “laundered” through Malaysia or other countries.
News of the Day
Reuters: OPEC+ Members Send Less Oil to US, Tight Supply Outlook
Summary
US crude imports from OPEC+ members have decreased over the past year, affecting US supplies and benefiting European markets. Adjustments to the Brent crude benchmark mean that future US import levels will influence global oil prices. This decline corresponds with supply cuts by OPEC, Russia, and their allies. For October, U.S. crude imports are expected to drop to 2.47 MMP/D from 2.92 MMB/D. Saudi Arabia, redirecting its exports, has increased its crude shipments to China while reducing its exports to the U.S.
EOA’s Main Takeaway
No one can deny that Aramco's pricing played a role. The story can easily be flipped. Blaming OPEC cuts and ignoring the economic conditions in the United States is not only clearly biased but also nonsense. If there was enough demand growth in the US, imports from OPEC would have increased (see Figure 2). Also, total imports in the first three weeks of October declined as shown in Figure (3)