China Poised for Decade-High Iranian Crude Imports in August

China Poised for Decade-High Iranian Crude Imports in August

Anticipated figures from data intelligence firm Kpler, as cited by Bloomberg, suggest China's oil imports from Iran could surge to as much as 1.5 million barrels per day (bpd) in August, marking the highest level since 2013.

Kpler's estimations reveal that from January to July 2023, China has been receiving an average of 917,000 bpd of oil from Iran. This robust trend is notable in the backdrop of China's status as the world's largest crude oil importer, a position that has driven an escalation in the procurement of Iranian crude this year. This increase can be partially attributed to heightened competition with India for cost-effective Russian crude supply.

Notably, private Chinese refiners in the Shandong province have significantly amplified their acquisition of Iranian crude. This development can be linked to intensified competition for Russian oil, resulting from increased demand from China's major state-owned refiners and Indian buyers, which has raised the relative price of Russian barrels.

As no official data on Iranian imports into China is available, reliance on tanker-tracking companies is paramount to capturing an accurate depiction of the volume of Iranian oil reaching China. These shipments, despite U.S. sanctions and limited destinations, continue to make their way to the Chinese market.

Commenting on China's July crude oil imports, Vortexa analysts projected that private Chinese refiners, known as "teapots," are likely to further boost imports of Iranian oil. This is especially true after Russia committed to reducing its oil exports for the current and upcoming months. In the shifting landscape, teapot refiners are expected to gravitate towards Iranian barrels or alternative heavy feedstocks due to the partial reinstatement of non-crude imports in Shandong.

Emma Li, China Market Analyst at Vortexa, highlighted the differing strategies of state-run refiners. These entities are likely to turn to crude from West Africa and the Americas, as the allure of attractive light-sweet crude margins incentivizes spot purchases, counteracting the rising prices of Saudi and Russian crude.

Meanwhile, Iran's oil exports have surged to a five-year peak of 1.4 million bpd. The Islamic Republic aims to further bolster its oil production, targeting a volume of 3.5 million bpd by the end of September.