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Tehran- Markets await Oil What will result is a faltering Iranian crude exports to China, at a time when prices have remained almost unchanged since the beginning of the year, amid regional tensions and monitoring the performance of global economies.
More than two years after the signing of the strategic document between Tehran and Beijing for a period of 25 years, last Friday, Reuters quoted sources in the trade and refineries sector as saying that “oil trade between… China Iran stumbled as Tehran blocked shipments and demanded higher prices from its largest customer, reducing cheap supplies to the world’s largest crude importer.
The decline in Iranian oil supplies, which constitute about 10% of China’s crude imports and which reached a record level last October, may support global prices and put pressure on the profits of Chinese refineries.
Conflicting reports
Iranian official authorities did not comment on the report, but the official Islamic Republic News Agency (IRNA) was quick to deny the decline in Iranian oil exports to China, according to the head of the Iranian-Chinese Joint Chamber of Commerce, Majeed Reza Hariri, who described the reductions offered by Iran To China in selling oil with “secrets”.
Hariri stressed that despite the US sanctions on Iranian oil, Tehran’s oil exports to China are the highest ever, and he believed that it is not appropriate to disclose the details due to foreign sanctions.
For its part, the Hamshahri newspaper affiliated with the Tehran municipality published a report in which it said that “contrary to the Reuters report, Iranian oil exports to China increased significantly during the last months of last year,” and that “China’s purchases of Iranian oil have reached 1.2 million barrels per day.” During last December.
This comes about 4 months after the Kepler Institute for Tracking Oil Shipments last summer indicated that Iranian oil exports to China rose to 1.5 million barrels per day last August, which is their highest level in about a decade.
Supplies decline
For his part, the head of the Syndicate of Oil, Gas and Petrochemical Exporters, Hamid Hosseini, confirmed to Al Jazeera Net the veracity of the reports regarding the faltering flow of his country’s oil to its ally, China, after it reduced the discount on its oil twice over the past five months, at a value of about $4 per barrel each time.
Hosseini added that it intends to reduce discounts again during the coming short period by about $4, describing the decline in China’s purchases of Iranian oil in the short term as a “natural matter.”
But Al-Husseini expected that his country’s oil sales to China would return to what they were due to the lack of alternatives to Chinese suppliers, as small companies from the private sector buy this crude and reap huge profits from the reductions in Iranian export prices.
Reasons and goals
Al-Husseini attributed the reason for the Iranian move to Tehran’s estimates regarding oil prices during the coming period, given the exit of Venezuelan oil from the market, security tensions in the Red Sea, and global crude prices.
In addition, according to Al-Husseini, Iran’s budget deficit requires increasing the state’s revenues and working to bridge the gap and finance the deficit by raising its oil sales prices. He stressed that his country’s estimates indicate the possibility of “undermining the dollar’s ability” during the new year, which prompted Tehran to raise its oil prices. , according to him.
The Iranian official expected an increase in demand for Tehran oil during the new year due to the gap in the production of the Organization of the Petroleum Exporting Countries (OPEC).OPEC) and expectations International Energy Agency With the growth of global demand for oil, he denied his country’s intention to export its surplus oil to countries that host the transcontinental refineries in which Iran has invested over the past years.
‘Smart move’
For its part, the Iranian Energy Press news agency described Tehran’s decision to reduce discounts on its oil sales to China as a “smart step,” stressing that a decline in Iranian oil supply would contribute to raising global oil prices.
The agency announced, in its report entitled “Stopping oil exports to China, the government’s most correct oil decision,” that Iranian oil sales to China jumped last December to more than 1.8 million barrels per day, due to “the increase in Iranian oil reserves on the surface of the seas.” “, noting that the total discounts on oil sales to China over the past nine months amounted to $4.2 billion.
Iran was forced to offer greater discounts following Western sanctions on Russian oil exports following the Russian-Ukrainian war, according to the Energy Press report, which considered Russian oil a competitor to its Iranian counterpart in China, and revealed the high costs of delivering Iranian oil to Chinese suppliers, due to the necessity of delivering it indirectly. Through a third country such as Malaysia.
While China saves billions of dollars by purchasing oil at a huge discount from producers subject to sanctions, led by Iran, the latter is negotiating with Chinese companies to barter Iranian oil in exchange for implementing housing projects in the country, which has been suffering from a decades-long crisis in housing activity.
