Why The U.S. Wants China to Stop Importing Iranian Crude - OIR 270721


Tuesday, July 27, 2021 / 09:04 PM / by Tom Kool of Oilprice.com / Header Image Credit: Reuters

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We will take a quick look at some of the critical figures and data in the energy markets this week. 

We will then look at some of the key market movers early this week before providing you with the latest analysis of the top news events taking place in the global energy complex over the past few days. We hope you enjoy.

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Chart of the Week

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  • The government of the United States is mulling a ban on Chinese imports of Iranian crude as it becomes increasingly clear that reaching a deal with Iran before the inauguration of its new government is unlikely.
  • The oil markets see the U.S. somewhat unlikely to antagonize China further, yet Washington would be inclined to highlight that it has other options to opt for should the talks fail altogether.
  • Verifiable Chinese imports of Iranian crude amounted to some 250kbpd over the course of H1-2021 according to vessel-tracking firm Kpler, a 130% increase year-on-year, largely coming on the back of Biden-era softening of rhetoric towards China.
  • A significant volume of Iranian exports, however, is routinely trans-shipped in the region of the Malacca Straits, rendering the deciphering of their final destination all but impossible. 

Market Movers

  • Brazil is expected to double its oil production between now and 2030, promoting its image as a safe-haven investment for oil and gas projects amidst shrinking international opportunities, buoying market sentiment for Petrobras (NYSE:PBR).
  • The Italian oil major Eni (NYSE:E) has signed an agreement with Azora Capital to buy 1.2GW of solar and wind capacity in Spain, boosting its renewables footprint in the Mediterranean. 230MW worth of solar assets are already in operation, the rest comes from solar projects already being developed.
  • ExxonMobil (NYSE:XOM) shut down its 120kbpd Slagen Refinery in Norway last month, becoming the fifth European refinery to see its operations halted for good because of pandemics-triggered ramifications. 

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Tuesday, July 27, 2021

France Bans Short-Haul Flights. Sapping jet prospects in one of Europe's largest markets, France banned short-haul flights if a direct train route of under 2h 30 min is available. In addition, it would be obligatory for all airlines to compensate for all carbon emissions during domestic flights by 2024.  

No G20 Consensus on Phasing Out Coal. Officials meeting at the G20 Environment Ministers Meeting in Naples failed to strike a deal on the worldwide future of coal, despite intense lobbying from the U.S. and the UK, Reuters reports. China, India, and Russia are seen to be most adamantly maintaining a future place for coal. 

Glencore Trader Pledges Guilty to Bribery. A former Glencore trader pleaded 
guilty in a U.S. federal court to funneling millions of dollars via intermediaries to bribe officials that would subsequently grant NNPC-allocated oil cargoes at favorable terms. 

Russia to Build LNG-Powered Icebreakers for the Arctic. Russia 
intends to build up a fleet of LNG-fuelled icebreakers to be used across the Northern Sea Route. Russia's nuclear giant Rosatom, the supervisor of Arctic navigation, says it is mulling the construction of 2-4 medium-sized icebreakers, presumably going for LNG synergies with NOVATEK's (MCX:NVTK) LNG projects in the Arctic.   

Asia Pacific LNG Prices Hit $14.5/mmBtu Threshold. Buoyed by buying tenders by Turkey's BOTAS and Kuwait's KPC, spot LNG prices have surged to multi-year highs, surpassing the threshold of $14.5 per mmBtu this week. 

Pakistan Ramps Up HSFO Imports. Against the background of exorbitantly high LNG prices in Asia, some major buyers, prime amongst them Pakistan, have started to buy up HSFO cargoes. Seeing its prices depressed throughout the year, HSFO is an almost ideal replacement for expensive gas, just as peak summer demand has hit the region.  

China Starts Anti-Dumping Probe Against Japan, SK. China's Ministry of Commerce started an anti-dumping investigation into flat-rolled electrical steel imported from Japan, South Korea, and the European Union, reinstating tariffs vis-a-vis those states following the expiry of tariffs in place for the last 5 years, 
Reuters reports.

ExxonMobil Sues Iraqi National Oil Company. US oil major ExxonMobil (NYSE:XOM) 
filed an arbitration case against Basrah Oil Company, Iraq's main state-owned oil-producing entity, over what it perceives to be a stalling of its divestment drive on West Qurna-1. ExxonMobil's 32.7% share in the field (that it operates) was assumed to be sold to a third party - market rumors presume a Chinese company - however, BOC has blocked the transaction and now claims to be intent on taking over the stake itself, Argus reports. 

Vitol Hands Out 2.9 Billion to Traders. The world's largest oil trading company has paid out a record $2.9 billion to its trading executives and staff, 
writes Bloomberg. With most of the profits stemming from Q2 2020 trading profits, this buyback comes on top of $2 billion of share buybacks in 2020 that were already accounted for last year. 

Copper Prices Surge Again on China Floods. Copper prospects have brightened again as benchmark LME futures continued their five-day bullish streak beyond $9800 per metric ton, amidst news of China floods, creating a double whammy of supply concerns and increasing demand to be utilized for infrastructure reconstruction. 

Greenpeace Seeks to Derail Latest North Sea Project. Greenpeace is 
seeking to take the UK government in court over the forthcoming 150 MMbbls Cambo project, as Britain prepares to host the COP26 Glasgow conference in November. Cambo, backed by Shell (NYSE: RDS.A) and located in harsh seas amidst complex geology, wields heavy oil of some 23-25° API and is expected to come onstream by 2025 – the government approval is expected to take place within several weeks. 

Coffee Rises Further on Brazil Cold. Another polar air mass is moving towards Brazil this week, risking to adversely impact the Latin American country's coffee harvest, already frost-bitten several times this year and further exacerbated by the worst drought in the last 100 years. Arabica coffee futures rose 10% on Monday alone, flying above the $200 per pound level, having already 
 20% last week.



The post Why The U.S. Wants China To Stop Importing Iranian Crude first appeared in Oilprice.com on July 27, 2021.  

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