Saudi and Russia gain from cut in Iran oil sales
The sanctions reducing Iran's oil exports have played in the favor of major producers such as Saudi Arabia, Russia and Venezuela which now export about 21% more crude to Asia's biggest buyers compared to a year ago.
Iran's exports to China, Japan, South Korea and India have fallen by a third in the first six months of the year as EU and US sanctions made it difficult to pay for the crude and find insurance cover for tankers. The US is also finalizing even tougher sanctions to restrict Iran's oil revenues.
As Iran's oil sales declined, the world's top oil exporter Saudi Arabia, Russia and other OPEC producers Venezuela and Angola ramped up their sales to Asia's top oil consumers where refiners can pick and choose from a variety of supplies in a market flush with crude. Asia is the region where oil demand is growing, as the US economy teeters on recession and Europe tries to stem its financial crisis.
Mr Sushant Gupta an analyst at Wood Mackenzie said that “We have seen that refiners have successfully replaced Iranian crude with other crudes. There is no pressure from the supply side.”
Western powers are trying to force Iran to abandon a nuclear program they believe is designed for building weapons. Tehran says it needs the technology to generate electricity. Japan, South Korea and India all cut imports from Iran to gain a waiver from the US sanctions which threaten to cut off institutions dealing with Iran from the US financial system.
China was also awarded a waiver after cutting its imports from Iran due to a dispute over contract terms earlier this year. The EU ban on insuring any Iranian oil shipments also hindered China's imports from Iran. In the H1 of the year, Saudi Arabia boosted sales to the top four Asian buyers by 15% YoY to 3.8 million barrels per day.
During the same period, Venezuela's YoY exports also jumped 42% to 596,000 barrels per day followed by 36% YoY increase in shipments from Russia to 682,000 barrels per day. Volumes from Angola have risen 24% YoY in the first 6 months to 994,000 barrels per day and 26% from Kuwait to 938,000 barrels per day.
China, Asia's top oil consumer and the world's second largest appeared to favor Russian crude in its purchases during the first 6 months of the year. China cut Iranian imports by 20.5% during that period to 429,873 barrels per day and Chinese data showed it replaced that amount as well as an additional 11% by imports from Saudi Arabia, Angola and Russia.
Russian imports recorded the biggest increase of 44% over the same period a year earlier followed by Angola's 35% and Saudi Arabia's 16%. Japan's purchases from Iran for the first six months fell 33.4 percent from a year earlier to 227,573 barrels per day with Saudi Arabia, Russia, Oman and Kuwait filling in the gap. The 17% fall in purchases by South Korea from Iran was filled up by Saudi Arabia, Kuwait and Qatar.
Source - Reuters