Published: Fri, August 10, 2018
Money | By Hannah Jacobs

US crude exports to India surge as China intake fades

US crude exports to India surge as China intake fades

Brent crude, the benchmark for more than half the world's oil, was up 0.5% at $74.13/bbl in London, while U.S. WTI was 0.3% higher at $69.23 in NY.

"We think India will continue to buy United States oil given the strength in USA production and the Indian market can emerge as a reliable buyer of U.S. oil", said Sri Paravaikkarasu, head of East of Suez Oil at consultancy FGE. For the same period, analysts expected crude inventories to decrease by about 3.3 million barrels.

The White House said in a statement Monday that the United States will reactivate a slew of sanctions on Iran's financial and industrial sectors beginning on Tuesday.

The Asian country buys roughly 11% of Iranian crude exports, and because of the threat of secondary sanctions, it's reportedly looking for alternative supplies.

Crude oil prices were moving between small gains and losses ahead of the start of trading in NY.

Indian refiners' interest in US crude will be welcome news to shale producers looking for buyers outside of China, which is likely to scale back imports as the trade dispute between the administration of President Donald Trump and Beijing escalates.

"Another factor to consider is that trade tensions might escalate and lead to slower economic growth, and in turn lower oil demand", said the IEA.

Crude has struggled to gain near $70 this month after retreating from the highs of June as the USA and China showed no sign of backing down from the trade fight, raising concerns over global economic growth.

U.S. sanctions against Iran, which shipped out nearly 3 million barrels per day (bpd) of crude in July, officially came into effect at 12:01 a.m. U.S. Eastern time (0401 GMT) on Tuesday.

Both benchmarks tumbled more than 3 percent on Wednesday after US data showed a smaller-than-expected weekly draw in crude inventories and a surprise build of 2.9 million barrels in gasoline supplies.

Oil prices held steady on Wednesday, supported by a report of rising U.S. crude inventories as well as the introduction of sanctions against Iran. The Ministry of Commerce said the U.S. decision to levy tariffs on Chinese goods is "very unreasonable", and the Asian nation will have to retaliate to protect its rightful interests and the multilateral trading system.

Anas Alhajji, an energy economist based in Dallas, Texas, told Xinhua that "Unlike the past, USA weekly crude oil inventories have become extremely sensitive to imports, making short term oil prices more volatile".

"Crude oil prices rose as the reality of U.S. sanctions on Iran weighed on sentiment".

The Vienna conference analysed oil market developments since it met in Vienna at the end of November and reviewed the oil market outlook for the remainder of 2018.

Official U.S. fuel storage data is due later on Wednesday from the Energy Information Administration.

Iranian oil exports fell to their lowest in four months in July, S&P Global Platts estimates, as key buyers have started to curtail their purchases as the first set of USA sanctions on Iran kick in. That compares to its previous year's spot purchases of 6.6 million barrels from the shale producer. Gasoline inventories increased by 3.1 million barrels and distillate stockpiles rose by about 1.8 million barrels.

Like this: