Chinese oil traders are seeking to capitalize on the short-term benefit of the US trade war and the resulting decline in crude prices, regardless of concerns about the long-term economic damage, the Financial Times reports.
Crude oil imports to China rose sharply in March and April, reaching nearly 11 mn bbl/d, the highest level in 18 months, compared to 8.9 mn bbl/d in January, according to Kepler tanker tracking data.
Fear of tougher U.S. sanctions on Iran prompted Chinese refiners to buy Iranian oil en masse, before that turned into a broader stockpiling of crude after prices fell, driven by increased OPEC production and former U.S. President Donald Trump's announcements of tariffs.
Despite analysts' warnings that the trade war could eventually lead to a decline in oil consumption, Chinese demand for auto and jet fuel remains strong, with some refineries postponing their annual maintenance to continue production, taking advantage of lower crude prices, Emma Lee, an analyst at market data firm Vortexa, told the Financial Times.
In contrast, private refiners face logistical challenges related to the sanctions on oil tankers, which has led to the accumulation of about 40 million barrels of Iranian crude oil on 36 vessels, including 18 million barrels in Singapore, 10 million in the Yellow Sea and 4 million in the South China Sea, according to Kepler's Johannes Rauboll.
However, private refineries continue to buy discounted Iranian oil to preserve their limited profit margins, especially since many of them are not connected to the US financial system, minimizing the financial consequences.
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