INSUBCONTINENT EXCLUSIVE:
It's not yet clear to what extent China will curb shipments of Iranian crude due to US sanctions.US President Donald Trump is redirecting
global oil flows.West African and Latin American producers are sending ever-growing volumes of crude to China
America's exports to the Asian country have slumped in favor of its neighbors
There's an urgent global need to find replacement barrels for Iran's, whose exports might just collapse next month.The thing that connects
the shifting flows is Trump's foreign policy
China's slumping purchases of American crude -- and its extra buying from elsewhere -- have coincided with a trade war between the US and
Likewise, reimposed sanctions on Iran, which start November 4, have increased the need for the type of heavy, sour crude that the Persian
Gulf state sells."If you combine the impact of US sanctions on Iran and the US trade war with China, it is Trump's foreign policy which is
reshaping oil flows," said Olivier Jakob, managing director of consultancy Petromatrix GmbH
"The US is becoming a great energy power and they will use that, we are starting to see the implementation of that in different parts of the
energy scene, part of that is being seen today in the oil flows."Oil markets are also grappling with record US output, fueled by shale
production, and America's removal in late 2015 of longstanding crude-export limits
Those shipments -- just a few hundred thousand barrels a day a few years ago -- now consistently top an average of 2 million barrels a day
American crude increasingly flows to markets in Asia, Europe and Latin America, data from the US Energy Information Administration
China, the world's largest energy consumer, in August didn't import any US crude for the first time since September 2016, according to the
most recent data from the US Census Bureau
That compares with almost 12 million barrels in July, when China was the second-largest recipient.Shipments to South Korea soared to a
record 267,000 barrels a day in August -- a 313 per cent year-on-year increase, according to Bloomberg calculations from Census data
Volumes to Japan and India rose by 198 per cent and 165 per cent, respectively
Exports to the UK, Italy and the Netherlands have also surged this year."The pattern of trade does look as though it's going to ebb away
from a focus on China to other Asian countries, and Europe," said Caroline Bain, chief commodities economist at Capital Economics.China is
also increasingly turning to other regions
Colombian exports to the Asian nation rose fivefold in September, while Brazilian shipments hit their highest level this year
Chinese refiners bought 1.71 million barrels of crude a day from West Africa for October loading, the most since at least August
2011.Sanctions' EffectIt's not yet clear to what extent, if any, China will curb shipments of Iranian crude due to US sanctions
However, buyers in India, Japan and South Korea are reducing purchases from the Persian Gulf state
Saudi Crown Prince Mohammed Bin Salman said that the kingdom and other OPEC producers are making up for lost supply from Iran.The demand for
replacement crudes is apparent
Exports from Oman last month rose to their highest levels this year on healthy demand from China, Bloomberg tanker-tracking showed
Kuwait is directing more flows to Asia, while its shipments to the US by late September all but dried up -- the first time that's happened
since the Gulf War of 1990-91.The curbs on Iran are having an effect on oil prices, with global benchmark Brent trading now trading near its
highest level in four years
Oman was the talk of one of the oil market's biggest gatherings last month, as its crude surged past $90 a barrel
Supertankers, which often benefit when trade flows are dislocated, are earning the most since early 2017.Flows from Iran could drop by 2
million barrels a day, to below 1 million barrels day in November and possibly December, Energy Aspects Ltd
said in a report dated October 1.Whether it's the need he's created for replacement supplies from Iran, or other actions by the US,
president Trump's policies are now having a direct impact on where oil is flowing, said Eugene Lindell, an analyst at JBC Energy GmbH in
Vienna."What you can say beyond doubt is that it's creating lots of exotic trade flows that hadn't been in the market before," he said
"It's been a major influence that has forced a change in trade flows."(Except for the headline, this story has not been edited by
TheIndianSubcontinent staff and is published from a syndicated feed.)
