Oil, gas and Iran economic analyst
Further evidence has emerged that Russia is competing with Iran and Venezuela for oil markets in China and India, according to shipping analytics firm Vortexa.
A report the company issued on July 21 says China appears to be hesitant so far to take huge volumes of Russian crude in contrast to India, with limited players involved, reducing the available market.
Iranian crude oil and condensate exports declined over the first half of 2022 after an initial surge in January 2022, as exports fell 160kbd (thousand barrels per day) from the first quarter to 820kbd in the second quarter, when Russia started to capture Iranian and Venezuelan oil markets in China.
But the overall reduction in Iran’s exports to China have not been as dramatic as in May, when another shipping analytics company Kpler reported that Iranian sales had halved in that month.
Before the Russian invasion of Ukraine, Iran's exports had risen sharply in January, the highest month on record since United States’ sanctions were imposed in 2018, surpassing 1.1mbd: "This contributed to a strong Q1 2022 where exports averaged 980kbd, a 130 kbd increase from Q4 2021.”
Initially, US sanctions reduced Iranian oil exports to less than 300,000 bpd, but since President Joe Biden assumed office in January 2021 and signaled his readiness to negotiate with Iran, shipments increased. China seeing a different US strategy began circumventing Trump’s sanctions and more than tripling imports from Iran.
Exports have since moved flat-to-lower, averaging 850kbd over February to June 2022, as "Chinese buyers have benefitted from increased competition between Iranian and discounted Russian crude".
The report added that meanwhile, Iran’s onshore crude inventories have broadly increased, after a 10mb drawdown from Q4 2021 to Jan 2022: "Q2 2022 crude/condensate exports declined 300kbd (in June) from January, coinciding with a 5mb stock build-up over the same period.
Tankers previously carrying Iranian crude switch to Russian trade
As of July 18, Vortexa tracked 11 unique tankers, mostly medium size Aframax vessels with around 750,000-barrel capacity, which have loaded Russian crude/products since April 2022, having previously carried Iranian crude. The 11 tankers account for 16 Russian oil liftings since April.
VLCCs (very large crude carrier with 2 million barrels capacity) previously carrying Iranian crude have also recently started carrying Russian oil, spurring its exports by 250kbd for first half of July.
The report added that as more companies scale back from carrying Russian crude/products, those familiar with the sanctioned crude trade will continue using their tankers to assist Russia in exporting oil East of Suez.
Dark ship-to-ship transfers of Russian Urals in the Atlantic are growing and involve tankers which have previously carried Iranian crude. As of 18th July, Vortexa tracked seven VLCCs and seven Aframax’s which have been in the Atlantic in recent weeks with their AIS (identification transponder) off. Of these, three VLCCs and two Aframax’s have previously carried Iranian crude.
