China’s crude drawdown puts Iranian barrels back in demand
Orisemeke Benjamin with agency
Shrinking crude inventories in China might spur a buying spree over the upcoming weeks, particularly for Russian and Iranian crude, bouyed by a record-high July stock draw in Shandong.
Chinese teapots are expected to boost their purchases of Iranian oil in the upcoming days as stockpiles in the northeastern Shandong province have dropped by a whopping 35 million barrels in July, equivalent to a 1.1 million b/d draw.
The gradual re-opening of product exports from China is pushing utilization rates amongst independent refiners, with run rates around 50% currently after multi-year highs seen in June-July.
Meanwhile, prices for Iranian barrels are edging higher as new supply from Kharg Island seems to be dissipating – in the first ten days of August, not a single VLCC was seen loading in Iran.
According to Kpler, Iranian crude held in floating storage remains relatively constant around 40 million barrels, double the amount seen in the first weeks of July when navigation was still unimpeded.
