TOKYO: China’s Iranian crude imports rose by more than a third in May to the second highest on record, helping keep overall Asian buying above the level allowed under a deal that eases some Western sanctions, government and tanker-tracking data showed.
China, Tehran’s largest oil client, has since late 2013 been stepping up purchases after a landmark November nuclear deal eased some sanctions on Iran and has been making up the main portion of stronger Asian imports since then.
With fighting engulfing swathes of Iraq and worries about potential disruption in shipments from OPEC’s second-largest producer, some Asian buyers are starting to see Iran as a more stable supplier.
“If there was an overthrow of the government in Baghdad this could bring the administration of the Iraqi oil industry to a standstill and remove 3 million bpd (barrels per day) from global oil supplies,” said Tom O’Sullivan, founder of independent energy consultancy Mathyos Japan. “About half of Iraq’s oil goes to China, so Iran could potentially fill the gap.”
Iran’s biggest buyers — China, India, Japan and South Korea —together took in 1.26 million barrels per day of the Islamic republic’s crude last month, up 8 percent from the same period a year ago, government and tanker-tracking data showed.
For the first five months of 2014, their imports averaged 1.25 million bpd, up 25.3 percent from a year ago, keeping Tehran’s exports above the 1 million bpd cap that it agreed under a deal with the West for six months to July 20. There are no indications that Washington will loosen up on the cap until a full nuclear deal with Tehran is reached, but there have been some signs of improving ties, including on how to respond to an Islamist militant insurgency in northern Iraq.
An oil industry expert in Asia, who declined to be identified, said concerns about unrest in Iraq disrupting oil supplies meant that some importers were also viewing Iranian supplies as more stable than Iraqi crude. Reuters
