Daily Energy Report
China’s Iran oil connection, Saudi cut to continue, Iraq/Turkey pipeline dispute, Oil prices through 2023, Oil Cos like lithium, Australia gas strike, and more.
Chart of the Day: China’s oil imports from Iran have been increasing.
Figure (1) above shows China's crude oil imports from Iran as compiled by Kpler analysts. Aside from July, it shows a continuous increase since the beginning of the year.
EOA’s Main Takeaway
Iran exports most of its oil to China either directly or indirectly. China’s official figures show only direct imports and don’t include transshipments through other countries and ship-to-ship transfers. Chinese official data are less than half of actual imports. We covered oil transshipment through Malaysia in a report entitled: Malaysia’s Role in Laundering Iranian Oil.
Kpler analysts have done a great job capturing all pieces of the Chinese imports from Iran. Their data shows a sharp increase in Chinese imports recently as shown in Figure (4). We believe that part of the recent increases in China’s oil imports from Iran came at the expense of Saudi and US market shares.
Data indicates that the recent increases in Chinese imports from Iran came from Iran’s floating storage. This conclusion raises doubts about some estimates that Iran increased its production noticeably in 2023. Data also show that this increase in imports from Iran came at the expense of imports from the US, indicating the competition between Iranian and US condensates.
Story of the Day:
Saudi Arabia is likely to extend its voluntary oil production cut of 1 million barrels per day into October, according to analysts, amidst supply uncertainties and a goal to reduce global oil reserves. This follows the OPEC+ deal in June to limit supplies until 2024, with Saudi Arabia's addition reducing its production to 9 million bpd, a multi-year low.
Factors in play:
Despite Brent oil prices rising by 14% in July, August saw a 3% drop due to concerns over China's demand.
Higher oil prices have made refiners reduce purchases and rely on previously stored inventories.
Potential oil production from Iraq's Kurdistan may influence Riyadh's decisions on supply. Iraq and Turkey are discussing resuming 450,000 bpd exports, previously stopped in March, though no agreement has been confirmed.