Chinese refiners have recently made a significant purchase of 8 million barrels of Iraqi crude, specifically Basrah Heavy and Basrah Medium, for prompt delivery. This move comes at a time when oil flows via the Strait of Hormuz, Iraq’s main export channel, have been reduced to a fraction of their previous levels due to an Iranian blockade. Despite the blockade, oil continues to flow through the strait, albeit at a much lower rate than before.
Some tankers have resorted to turning off their transponders to evade detection by vessel-tracking systems, but this has not been enough to bring oil flows back to pre-blockade levels. Additionally, Saudi Arabia has had to reroute its oil exports through the Red Sea and the Suez Canal to avoid Yemeni Houthi attacks on its tankers and energy infrastructure.
In contrast, Iraq has managed to increase its exports through the Strait of Hormuz in recent months. The country’s state oil marketing company reported that Iraq has been exporting crude at a rate of 2 million barrels per day since the beginning of the month.
The purchase of Iraqi crude by Chinese refiners will help offset the delays in receiving oil from Saudi Arabia, which is taking longer to reach China due to the Red Sea and Bab el-Mandeb situation. In addition to Iraqi crude, Chinese refiners have also been buying Emirati crude, with major Chinese companies purchasing 2 million barrels of Upper Zakum at a recent spot tender.
Overall, the geopolitical tensions in the region have had a significant impact on oil flows and trade routes, prompting refiners to seek alternative sources of crude oil to meet their demand. The situation remains fluid, and market participants are closely monitoring developments to navigate the evolving landscape of the global oil market.
This article was written by Irina Slav for Oilprice.com and originally published on their website. For more expert analysis and insights on the energy market, readers can subscribe to Oilprice Intelligence for free and stay ahead of the curve with timely information and market signals.
