Chinese Refinery Orders Oil from Africa Instead of Iran

According to reports, a Chinese refinery has made an unprecedented move to order light oil from Africa instead of Iran and Russia due to "changing conditions." This news comes a day after Iran's oil minister expressed "confidence" that Donald Trump's victory in the U.S. presidential election would be "ineffective" on Iran's oil exports. Bloomberg reported that the two-million-barrel shipment ordered by the independent Chinese refinery "Landbridge" from Africa for January delivery is of a type known as "Mustarda," which is very similar to Iranian light oil. On Thursday, November 24, Bloomberg cited trade sources stating that Iran, unlike previous months when it delivered its light oil at $1.80 below Brent crude prices, nearly doubled this discount last month to $3.50. Small independent Chinese refineries, known as teapots, are the only customers for Iranian crude oil, and the Islamic Republic delivers its oil through brokers with significant discounts under the names of Malaysian, Omani, and Iraqi oil. The news of these Chinese refineries turning to Africa instead of Iran comes as Iran's oil minister, Mohsen Paknejad, told reporters yesterday that "measures have been taken and we have no serious concerns about oil exports." He did not explain what these measures are, but if he meant a significant increase in discounts, Bloomberg's report indicates that Chinese refineries are still looking to replace part of Iran's oil. Politico reported on November 18, citing four officials from Donald Trump's previous administration and individuals close to his campaign, that the policies of the next U.S. president would revive "maximum pressure" on Iran; a topic that Bloomberg also mentioned, noting that speculation among international financial institutions about increased U.S. strictness against Iran's oil exports has risen. Bloomberg reported that in addition to the potential return of Trump's "maximum pressure" policy against Iran, the limited supply of Iranian crude oil due to concerns about a possible Israeli attack on Tehran's energy infrastructure last month has also prompted Chinese refineries to look for alternative sources. Previously, the commodity information company, Kpler, along with the energy consulting firm, Vortexa, told Radio Farda that Iran's fear of a possible Israeli attack on oil infrastructure caused oil loading in October to drop by 350,000 barrels per day compared to the previous month, reaching 1.5 million barrels per day. New statistics from OPEC and the International Energy Agency also indicate a decline of 60 to 70 thousand barrels in Iran's daily oil production last month compared to September. Small independent Chinese refineries prefer to buy sanctioned oil from Iran and Russia to earn more profit due to significant discounts; however, oil traders told Bloomberg that unlike Iran, which has doubled its oil discount to these refineries, Russia has reduced the discount for light oil from $1.80 to $0.50. This indicates that Russia is not particularly concerned about its oil being replaced by other countries. On the other hand, new OPEC statistics released on Wednesday, November 23, show that Russia's oil production increased last month, and statistics from the "Center for Energy and Clean Air Research," which publishes weekly reports on fossil fuel export revenues, also acknowledged that China was the buyer of 47% of Russia's total oil exports last month, remaining its largest oil customer. The data from this report indicates that Russia's oil export levels have increased, and its oil discounts to customers have reached their lowest levels in recent years.