Russia and Iran Slashing Prices to China as Oil Piles Up at Sea

wif9iy68{3pykh2jh[2do]))_media_dl_1.png KplerArticle content(Bloomberg) — Russian and Iranian oil producers are offering deepening discounts as they compete for the same limited group of Chinese buyers after India retreated from purchases.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentIndia’s imports from Russia could drop by 40% from January levels to around 600,000 barrels a day, according to a scenario from Rystad Energy. Much of the displaced cargoes are now heading east, spurring a price war with Iranian suppliers that have long been favored by China’s private refiners.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentRussia’s Urals grade is selling at around $12 a barrel below ICE Brent, according to traders familiar with such deals, compared with a $10 discount last month. Iranian Light is going for as much as $11 less than the global benchmark, they said, asking not to be named as they’re not authorized to speak to media. That’s widened from $8 to $9 in December.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentThe independent Chinese refiners, known as teapots, have historically acted as the oil market’s pressure valve, absorbing barrels shunned by others. But their capacity is finite, given they only account for around a quarter of the country’s processing capacity and are also subject to government-set import quotas.Article contentWith China unable to fully soak up the displaced crude, unsold oil is piling up in Asian waters and Russia and Iran are running out of options. The Kremlin has already been forced to curb output, depriving it of funds for its war in Ukraine. Iran, meanwhile, is trying to ship as much oil as it can as it girds itself for a potential attack by the US.Article content“Chinese private refiners cannot take in much more as their capacity is likely maxed out,” said Jianan Sun, an analyst at Energy Aspects, pointing to sanctioned barrels building up in both onshore and offshore storage. Article contentArticle contentThe major Chinese state-owned refiners have traditionally avoided Iranian crude and have, more recently, largely absented themselves from the Russian trade as well. Article contentSo far, it looks like Iran is taking a hit as Russia muscles in on the market. Deliveries of Russian oil to Chinese ports rose to 2.09 million barrels a day in the first 18 days of February, vessel-tracking data compiled by Bloomberg show. That’s a roughly 20% increase from January and a jump of around a half from December.Article contentBy contrast, Iran has exported about about 1.2 million barrels a day to China so far this year, down around 12% from the year-earlier period, according to Kpler.Article contentThe data intelligence firm estimates there are now almost 48 million barrels of Iranian oil at sea, up from about 33 million in early February. Most of the increase is happening in the Yellow Sea and Singapore Strait. Meanwhile, there are around 9.5 million barrels of Russian oil sitting in Asian waters. Article contentA major US attack on Iran could affect the country’s ability to keep exporting if its oil facilities are targeted or transport through the Strait of Hormuz is disrupted. The US has stationed a vast array of forces in the Middle East, and while President Donald Trump has said his preference was to strike a diplomatic agreement, he’s also warned no deal would be “very bad” for Tehran.Article contentRussian barrels also carry a “relatively lower level of risk” for Chinese buyers than Iranian cargoes due to optimism over a potential ceasefire in Ukraine, said Lin Ye, the vice president of oil markets at consultancy Rystad Energy.Article content—With assistance from Serene Cheong.Article contentTrending Canada's housing market suffers largest price decline among major economies, says BIS Real Estate Posthaste: Canadian dollar is facing a big risk that markets seem to be overlooking News New cross-border U.S. pipeline proposal could revive idle Keystone XL assets: analysts Oil & Gas Garry Marr: Mexico chaos shows it's time to start thinking of your vacation as an investment and hedge your bets Personal Finance Here's why mortgage renewals may be the banks' biggest rip-off Personal Finance Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. Canada's housing market suffers largest price decline among major economies, says BIS Real Estate Posthaste: Canadian dollar is facing a big risk that markets seem to be overlooking News New cross-border U.S. pipeline proposal could revive idle Keystone XL assets: analysts Oil & Gas Garry Marr: Mexico chaos shows it's time to start thinking of your vacation as an investment and hedge your bets Personal Finance Here's why mortgage renewals may be the banks' biggest rip-off Personal Finance