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Home Business News Crude oil under the US embargo is overflowing off China's coast

Crude oil under the US embargo is overflowing off China’s coast

According to data firm Kpler, there are about 22 million barrels of oil from countries subject to US sanctions waiting off the coast of China. Vortexa said that hundreds of thousands more tons of crude oil from Russia would arrive at Chinese ports this month.

The data and analysis company Kpler said ships carrying about 22 million barrels of oil from Russia, Iran and Venezuela are concentrated off the coast of China. The resurgence of COVID-19 is denting oil demand and causing logistical problems in the world’s second-largest economy.

China has been one of the few buyers of oil embargoed from Iran and Venezuela over the years. The world’s largest crude oil importer accepts supplies from Russia, although most countries are shunning the product.

China is the new largest Russian oil importer.

A major outbreak in China has disrupted the falling oil trade, increasing wait times for unloading. Kpler estimates that oil demand will fall by at least 450,000 BPD in April, mainly due to gasoline and jet fuel consumption declines.

“The lockdowns in China are having a huge impact on people’s movement and oil demand,” said Jane Xie, senior oil analyst at Kpler. Another problem is logistical congestion.”

Congestion has worsened since the beginning of the year. Bloomberg calculations based on official data show that China’s oil demand averaged around 13.7 million BPD in January and February before the latest outbreak began. At that time, only about 10 million barrels of oil from Russia, Iran and Venezuela were waiting off the coast of China, now 22 million.

The average waiting time for ships at Chinese ports has increased from 4.46 days in the week starting March 28 to 5.85 days now. For Suezmax, which can carry up to 1 million barrels of crude oil, the waiting time jumped from 4.46 to 15 days.

Another analyst firm, Vortexa, estimates that around 16 million barrels of Iranian and Venezuelan crude are waiting off the coast of China. About ten aframax-sized vessels – each able to carry up to 100,000 tonnes of oil – from Russia’s Far East are en route to China in the first half of April. The goods were probably purchased before Russia invaded Ukraine. Still, she added, said Emma Li, an analyst at Vortexa.

The Chinese government calls on businesses to be cautious about Western sanctions against Russia. The Reuters source expected Chinese state-owned enterprises to honour existing contracts for Russian oil but avoid entering into new spot contracts, as their actions are seen as acting on behalf of the government.

 

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