Sanctioned oil piling up off China as Covid-19 outbreak worsens
Sign up now: Get ST's newsletters delivered to your inbox
A photo from Oct 22, 2018, showing oil and gas tanks at an oil warehouse at a port in Zhuhai, China.
PHOTO: REUTERS
BEIJING (BLOOMBERG) - Tankers carrying 22 million barrels of Russian, Iranian and Venezuelan oil are piling up off China, according to data analytics specialist Kpler, as the country battles a Covid-19 outbreak that is sapping demand and causing logistics problems.
China has been one of the only buyers of sanctioned Iranian and Venezuelan oil over the last few years. The world's largest crude importer is also still taking Russian supplies that are being largely shunned since the invasion of Ukraine.
The trade in the discounted oil is now being disrupted by the country's worsening virus outbreak, with waiting times to unload ships increasing.
Kpler estimates that daily oil demand will drop by at least 450,000 barrels in April, mainly due to falling consumption of petrol and jet fuel, according to Ms Jane Xie, a senior oil analyst at the firm in Singapore.
"The ongoing lockdowns in China are definitely having a massive impact on the country's mobility and consequent oil demand," she said. "There are also logistical bottlenecks."
The current logjam compares with around 10 million barrels of oil from Russia, Iran and Venezuela that were sitting off the Chinese coast at the start of the year, according to Kpler. China's apparent oil demand averaged around 13.7 million barrels a day in January and February before the current virus outbreak, Bloomberg calculations based on official data show.
Average waiting times for ships at Chinese ports have risen to 5.85 days now from 4.46 days in the week starting March 28, it said. For Suezmax vessels, which can hold up to one million barrels of crude, they have surged to 15 days from 4.46 days last week.
Another analytics company, Vortexa, said there are around 16 million barrels of Iranian and Venezuelan crude in tankers waiting off China.
There are, however, 10 aframax-sized vessels - which can carry about 100,000 tonnes of oil each - from Russia's Far East that are showing China as their destination in the first half of this month, according to Vortexa analyst Emma Li. These cargoes were likely to be purchased before the invasion of Ukraine, she said.
