Connect with us

Commodities

China’s Iranian oil imports ease on poor margins, lure of Russian oil

Published

on


© Reuters. Oil and gas tanks are seen at an oil warehouse at a port in Zhuhai, China October 22, 2018. REUTERS/Aly Song/Files

(Refiles to correct spacing in paragraph 16)

By Chen Aizhu and Bozorgmehr Sharafedin

SINGAPORE/LONDON (Reuters) – China’s Iranian oil imports in April came off peak volumes seen in late 2021 and early 2022 as demand from independent refiners weakened after COVID-19 lockdowns pummelled fuel margins and on growing imports of lower-priced Russian oil.

The easing of Iranian oil purchases, which still make up some 7% of imports by the world’s largest crude importer, came as Western diplomats have largely lost hope in reviving a 2015 nuclear pact while high oil prices emboldened Iran to take its time to return to an agreement.

A revived nuclear deal would allow Iran to boost its oil sales beyond China – Iran’s number one customer for the past two years – to previous clients in South Korea and Europe.

Meanwhile, Russian crude, displaced by falling demand in Europe on growing concerns about sanctions over Russia’s invasion of Ukraine, is heading to China. Russia sent tens of thousands of troops into Ukraine on Feb. 24 in what it called a “special operation”.

Initial assessments by Vortexa Analytics showed China imported nearly 650,000 barrels per day of Iranian crude in April, slightly less than the nearly 700,000 bpd discharged in March.

Kpler, another data analytics firm, tentatively pegged Iran’s April exports at 575,000 bpd, down from an average of 840,000 bpd in the first quarter of 2022, though the agency expected to revise up April volumes in coming weeks.

China’s independent refiners, also known as teapots and situated mostly in the eastern province of Shandong, are key Iranian oil buyers. The refiners have since February reduced crude imports, operating under half their capacity in April as soaring prices, tighter import quotas and COVID lockdowns squashed margins, traders said.

“The Iranian barrels started having difficulties finding buyers since February, after independent plants cut throughput,” said Emma Li, China analyst with Vortexa.

At least six cargoes of Iranian oil totalling eight million barrels have not been able to offload at Chinese ports, floating off Shandong and Zhejiang ports for more than three months, Li added.

In contrast, China’s sea-borne crude imports from Russia jumped 16% in April from March to about 860,000 bpd, the highest since last December, Refinitiv data showed.

Though the April Russian supplies were dominated by its Far East export grade ESPO blend, the prospect of growing Urals cargoes being forced out of Europe is providing a new lure for the teapots.

At least one teapot refiner bought one June-arriving Urals cargo at a discount of $6 to $7 a barrel to Brent on delivered basis, traders said.

That compared with Iranian oil, transacted at $5 a barrel under Brent.

“Teapots are facing terrible margins and plentiful oil on offer. Dealing Iranian and Russian barrels both carries risks, so refiners would be careful and picking the cheaper supplies that offer relatively better margins,” said a trading executive with a Shandong-based refiner.

To avoid U.S. sanctions, Iranian crude has been exported to China marked as oil from Oman, the United Arab Emirates and Malaysia, traders have said.

Aware of the Chinese purchases, U.S. President Joe Biden’s administration has chosen not to enforce the sanctions against Chinese individuals and companies.

China’s foreign ministry did not respond to request for comment. Iran’s oil ministry also did not respond to a request for comment.

Chinese customs data last reported imports of 260,000 tonnes (1.9 million barrels) of Iranian oil each in December and January, in its first official record in a year.

(Refiles to correct spacing in paragraph 16)

Commodities

Exclusive-Petrobras warned of diesel shortages before CEO ouster

Published

on

2/2

© Reuters. A worker paints a tank of Brazil’s state-run Petrobras oil company in Brasilia, Brazil September 30, 2015. REUTERS/Ueslei Marcelino/File Photo

2/2

By Sabrina Valle

(Reuters) -Brazil’s Petrobras alerted the government last week that diesel pumps could run dry this year if the oil company does not sell fuels at market prices, according to four people close to discussions and an internal presentation seen by Reuters.

Just days later, President Jair Bolsonaro fired the chief executive of Petroleo Brasileiro SA, as the state-controlled company is formally known.

Bolsonaro’s chief of staff said the president is “anguished” by rising fuel prices and the pricing policy at Petrobras needs to be more aligned with the government’s thinking.

As Brazil enters a crucial window to secure diesel supplies, Petrobras management warned last week that the firm and other importers would struggle to secure diesel amid the most severe shortage of the fuel in 14 years, the sources said.

Analysts, private importers and officials at oil regulator ANP have echoed those concerns, said people familiar with the talks, who requested anonymity to discuss the politically sensitive matter.

The Petrobras presentation flagged the risk of shortage in the third quarter, when diesel demand surges seasonally in both the United States and Brazil, a major grains exporter expected to start shipping a bumper corn crop in August.

“If there is no signal of market prices ahead, there is material risk of a diesel shortage during the peak of demand during the harvest season, affecting Brazil’s GDP,” Petrobras said in the presentation titled “Fuels: challenges and solutions” and dated May 2022.

Petrobras did not respond to a request for comment.

Diesel supply has become a global concern since sanctions against Russia reshaped fuel trade and sent international inventories to historic lows. Importing countries are sizing up the risk of both rising costs and supply running short, as the industry shuts refineries for repairs or to cut carbon emissions.

Concerns in Brazil about diesel imports in the second half of the year rose after U.S. Gulf refiners, its major suppliers, started redirecting cargoes to Europe, two of the sources said.

“Global diesel inventories are far below the historic average,” Petrobras said in the presentation shared with the Ministry of Mines and Energy. “Petrobras alone cannot solve the global rise of energy prices.”

Energy Minister Adolfo Sachsida on Friday called oil analysts to ask about diesel shortages in the second half of the year, said a person directly involved in the matter. The ministry did not respond to a comment request.

“If Petrobras stops selling diesel at international prices for more than two or three weeks, there is a chance pumps will run dry,” a top executive from a large diesel producer said.

SUGGESTING SUBSIDIES

Executives at Petrobras, whose bylaws bar it from selling fuel at a loss without compensation, suggested in the presentation that Brazil could cut taxes or otherwise subsidize fuels to consumers, citing the example of several European Union nations.

Fuel subsidies cost Brazil about 7.5 billion reais ($1.6 billion) in 2018, when former President Michel Temer implemented them for a few months to halt a national trucker protest.

The cost of a similar measure this year could surpass 60 billion reais, estimated one of the people close to the discussions.

Russia’s invasion of Ukraine sent crude oil prices to a 14-year high. This month, global shortages led diesel traders to pay a premium of more than $50 per barrel.

At their maximum, Brazilian diesel inventories can cover about a month of national demand. At Petrobras, supplies are at about half capacity, according to two sources.

Brazil books cargoes in June for the August-October harvest season, when most grains reach port via long trucking routes.

The company has begun turning to more distant providers in Western Africa and India, one of the sources said. But while a Gulf diesel cargo takes two to three weeks to arrive in Brazil, a ship from India could take 45-60 days.

“If refineries in the U.S. get damaged during the hurricane season, or anything else contributes to a tighter market, we could be in real trouble,” a Petrobras executive said on condition of anonymity.

($1 = 4.79 reais)

Continue Reading

Commodities

Oil rises as tight supply counters economy fears and China curbs

Published

on


© Reuters. FILE PHOTO: A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson

By Alex Lawler

LONDON (Reuters) -Oil rose on Tuesday, recovering earlier losses, as tight global supply and an expected pick-up in fuel demand during the U.S. summer driving season balanced concerns over a possible recession and China’s COVID-19 curbs.

In a step that analysts say will further tighten the market, the European Union is moving closer to agreeing a ban on Russian oil imports. Such an embargo is likely to be agreed “within days”, Germany’s economy minister said on Monday.

Another source of support is U.S. gasoline demand. U.S. Memorial Day weekend travel is expected to be the busiest in two years as more drivers hit the road and shake off coronavirus lockdowns despite high pump prices.

“The oil market remains caught between fears of recession and the consequences of the zero-COVID policy in China on the one hand, and tight supply, especially of oil products,” Commerzbank (ETR:CBKG) analyst Carsten Fritsch said in a report.

Brent crude rose 44 cents, or 0.4%, to $113.86 a barrel by 1110 GMT. U.S. West Texas Intermediate (WTI) crude added 36 cents, or 0.3%, to $110.65.

Oil has surged this year, with Brent crude hitting $139 a barrel in March for its highest since 2008 after Russia’s invasion of Ukraine exacerbated supply concerns.

Even so, worries about threats to the global economy – a main theme of the Davos meeting taking place this week – limited gains and were behind price falls earlier on Tuesday.

“Global economic growth is declining precipitously under the collective impact of rising interest rates, Chinese COVID flare-ups and the European war,” said Tamas Varga of oil broker PVM.

Beijing is stepping up quarantine efforts to end its month-old outbreak while Shanghai’s prolonged lockdown is due to be lifted in a little more than a week.

Weekly U.S. inventory reports will be in focus later for a read on the strength of demand. Analysts expect gasoline and crude inventories to drop. The first report is from the American Petroleum Institute at 2030 GMT. [EIA/S]

Continue Reading

Commodities

Indian oil minister says oil at $110 a barrel not sustainable

Published

on


© Reuters. FILE PHOTO: India’s Minister of Petroleum and Natural Gas Hardeep Singh Puri speaks during an interview with Reuters in Abu Dhabi, United Arab Emirates, November 15, 2021. REUTERS/Abdel Hadi Ramahi

DAVOS, Switzerland (Reuters) – India’s Oil Minister Hardeep Singh Puri told the World Economic Forum in Davos on Tuesday that a crude oil price of $110 a barrel was not sustainable, as the world faces an energy price crisis which is contributing to rising global inflation.

Oil prices have surged this year, with Brent crude hitting $139 a barrel in March for its highest price since 2008, after Russia’s invasion of Ukraine exacerbated supply concerns. [O/R]

As countries around the world struggle with the impact of inflation on disposable income, India’s Commerce Minister Piyush Goyal said on the same WEF panel that food inflation in the South Asian country was at a “manageable level”.

Goyal also said that India was producing enough wheat for domestic consumption, as some countries face shortages due to price rises and problems in getting the grain from major producer Ukraine following Russia’s invasion.

Continue Reading

News

Cryptocurrency18 mins ago

Top 3 cryptocurrencies that are faring the best in the 2022 bear market

Top 3 cryptocurrencies that are faring the best in the 2022 bear market The crypto market has been in decline...

Sports & General18 mins ago

Former White House press secretary to join MSNBC cable network -statement

© Reuters. FILE PHOTO: U.S. White House Press Secretary Jen Psaki holds her last press briefing at the White House...

Stock Markets18 mins ago

Tata Steel says India export tax could alter output targets

© Reuters. FILE PHOTO: A company logo is seen outside the Tata steelworks near Rotherham in Britain, March 30, 2016....

Cryptocurrency24 mins ago

Understanding Tether’s Peg and Reserves and How They Work

Understanding Tether’s Peg and Reserves and How They Work How to maintain Tether’s stability. Tether’s reputation and transparency. Financial reserves...

Cryptocurrency24 mins ago

LTC Social Engagement Jumps 21% After MimbleWimble Activation

LTC Social Engagement Jumps 21% After MimbleWimble Activation The Litecoin community has recently approved the activation of the MimbleWimble protocol...

Uncategorized24 mins ago

Crypto Flipsider News – Bitcoin Drops Below $29k to Mark 8 Week Bearish Streak; Uniswap to Launch on Moonbeam & Gnosis; Binance Debuts Payment and Trading in Dubai; Sumitomo Launches Institutional Cry

World24 mins ago

Trump’s sway faces biggest midterm test in Georgia’s Republican races

4/4 © Reuters. Georgia Governor Brian Kemp waves to the crowd following a rally ahead of the state’s Republican primary,...

Economy24 mins ago

EU summit unlikely to find solution on Russia oil embargo, von der Leyen says

2/2 © Reuters. FILE PHOTO: Models of oil barrels and a pump jack are seen in front of displayed EU...

Stock Markets25 mins ago

Denmark stocks lower at close of trade; OMX Copenhagen 20 down 0.76%

Investing.com – Denmark stocks were lower after the close on Tuesday, as losses in the Personal & Household Goods, Healthcare...

Stock Markets25 mins ago

Ralph Lauren expects margins to grow on resilient luxury demand

© Reuters. FILE PHOTO: A man walks past Ralph Lauren Corp.’s flagship Polo store on Fifth Avenue in New York...

Stock Markets25 mins ago

Billionaire Steyer backs climate tech firm Regrow Ag

© Reuters. FILE PHOTO: An orchard is planted near Teviston, California, U.S., October 22, 2021. REUTERS/Stephanie Keith By Simon Jessop...

Economy25 mins ago

Chanel may limit purchases more in exclusivity drive

© Reuters. FILE PHOTO: The logo of fashion house Chanel is seen on a store in Paris, France, June 18,...

Stock Markets54 mins ago

Kim Kardashian Named Beyond Meat’s First Chief Taste Consultant, Shares Fail to Hold on to Gains

© Reuters. Kim Kardashian Named Beyond Meat’s (BYND) First Chief Taste Consultant, Shares Fail to Hold on to Gains Beyond...

Economy54 mins ago

US Business Activity Softens as Inflation Tempers Demand

(Bloomberg) — US business activity settled back to a four-month low in early May as costs ballooned and high selling...

Stock Markets54 mins ago

Ralph Lauren expects margins to grow as rich customers shrug off inflation

© Reuters. FILE PHOTO: A man walks past Ralph Lauren Corp.’s flagship Polo store on Fifth Avenue in New York...

Cryptocurrency54 mins ago

Game on: Yield Guild Games scholarships on the rise through Q1

Game on: Yield Guild Games scholarships on the rise through Q1 Yield Guild Games (YGG) has released its Community Update...

World54 mins ago

Tedros re-elected as head of World Health Organization

© Reuters. FILE PHOTO: Director-General of the World Health Organization (WHO) Tedros Adhanom Ghebreyesus addresses the 75th World Health Assembly...

Cryptocurrency55 mins ago

Coinbase Wallet Extends Token Swaps With BNB Chain and AVAX

Coinbase Wallet Extends Token Swaps With BNB Chain and AVAX Coinbase (NASDAQ:COIN) wallet adds BNB Chain and AVAX networks. The...

World55 mins ago

U.S. Senate candidate sues over mail-in ballots in Pennsylvania midterms primary

2/2 © Reuters. FILE PHOTO: Republican Party U.S. Senate candidate David McCormick speaks to reporters after voting in the primary...

Economy55 mins ago

Exclusive-Sri Lanka’s prime minister says will slash expenditure in new budget

2/2 © Reuters. People wait in a line to buy domestic gas tanks near a distributor, amid the country’s economic...

Economy55 mins ago

U.S. new home sales hit two-year low; prices surge

© Reuters. FILE PHOTO: A home under construction stands behind a “sold” sign in a new development in York County,...

Cryptocurrency1 hour ago

El Salvador’s Bitcoin play: What does the current slump mean for adoption?

El Salvador’s Bitcoin play: What does the current slump mean for adoption? It was September 6, 2021, when the Central...

World1 hour ago

Does the Commonwealth have a future after Queen Elizabeth?

© Reuters. FILE PHOTO: Britain’s Queen Elizabeth leaves after watching the Royal Windsor Horse Show Platinum Jubilee Celebration at Windsor...

Stock Markets1 hour ago

Snowflake Stock Plunges 7% Despite Rosenblatt Upgrade to Buy on Valuation and Growth

© Reuters. Snowflake (SNOW) Stock Plunges 7% Despite Rosenblatt Upgrade to Buy on Valuation and Growth By Senad Karaahmetovic Shares...

Cryptocurrency1 hour ago

SHIB Passes FTX for Biggest Holding by USD Among Top 500 Whales

SHIB Passes FTX for Biggest Holding by USD Among Top 500 Whales SHIB just flipped FTT for the biggest holding...

Cryptocurrency1 hour ago

Colombian Crypto Market Advances, but Users Demand Greater Security

Colombian Crypto Market Advances, but Users Demand Greater Security A little more than a third of Colombians would be willing...

Cryptocurrency1 hour ago

A Gaming Token RoboApe With The Potential To Be Ranked As High As Avalanche Or Even Ethereum

A Gaming Token RoboApe With The Potential To Be Ranked As High As Avalanche Or Even Ethereum Blockchain and cryptocurrencies...

Coronavirus1 hour ago

U.S. births rise for the first time in seven years in 2021

© Reuters. FILE PHOTO: A general view of the U.S. Centers for Disease Control and Prevention (CDC) headquarters in Atlanta,...

Stock Markets1 hour ago

Exclusive-Oracle to win unconditional EU nod for $28.3 billion Cerner deal -sources

© Reuters. FILE PHOTO: The company logo for Oracle Corp. is displayed on a screen on the floor at the...

Stock Markets1 hour ago

Wall St plunges as Snap’s bleak forecast sparks selloff

2/2 © Reuters. FILE PHOTO: Snapchat app is seen on a smartphone in this illustration taken, July 13, 2021. REUTERS/Dado...

Trending