The prices of crudes from Canada, South America, and Africa have jumped in recent weeks as Chinese oil import demand is rising from a decade-low, benchmark prices rally, and Middle East supply remains disrupted.
The Djeno crude from Congo, one of the smaller producers in OPEC, is being offered at a premium of $20 per barrel over ICE Brent, anonymous traders told Bloomberg on Monday. That’s up from a $15 a barrel premium two weeks ago, according to the traders.
The prices of crudes from Canada, Brazil, and Argentina are also rising amid increased appetite in Asia.
Asian crude oil importers, including China, Japan, and South Korea, have turned to buying oil from as far as Argentina to offset supply losses from the Middle East.
In recent weeks, refiners in Asia have bought Argentina’s Medanito crude, and at least one cargo of the oil comparable to the U.S. West Texas Intermediate loaded in August, anonymous traders with knowledge of the purchases told Bloomberg last week.
China, in particular, is boosting imports of African and American grades, as well as of its favorite ESPO blend from Russia, as Iranian crude supply has rapidly dried up in recent weeks following the re-imposed U.S. blockade on Iran’s oil exports.
The world’s top crude oil importer, China, has seen its crude imports rebound from the decade-low level in June as Beijing eased fuel export restrictions and refiners moved to restock and capture fairly decent refining margins.
Yet, Chinese crude oil imports, estimated at about 7.3 million barrels per day (bpd) in August, remain well-below the pre-war levels of 11-12 million bpd, suggesting that China would remain selective in crude purchases amid volatile and often spiking oil prices. Beijing can still afford to be selective as it had amassed an estimated 1.4 billion barrels of crude in commercial and strategic storage before the Iran war began.
Currently, the biggest losers in China’s refining industry are the small independent refiners who had relied for years on dirt-cheap Iranian and Venezuelan crude. Now one is not flowing out of the Persian Gulf, the other is not so cheap anymore.
By Michael Kern for Oilprice.com
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