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Demand And Storage Cause Notable Shifts In Iraq’s Oil Flow To India, China

Demand And Storage Cause Notable Shifts In Iraq’s Oil Flow To India, China
Demand And Storage Cause Notable Shifts In Iraq’s Oil Flow To India, China

2020-06-13 00:00:00 - From: Iraq News


The flow of Iraqi crude oil to Asia’s giant oil consumers took a new turn in the past two months, influenced by waning oil demand, and trading activities amid low prices. Basrah exports to the Indian market kept dropping in May, reaching their lowest monthly level since mid-2018, according to vessel tracking data. Exports to China, on the other hand, climbed to an all-time high, months after COVID-19 fueled concerns over Iraq’s exports to the Chinese market.

Iraqi Crude Exports to China

In April, Iraq’s Basrah exports to China climbed to 1.5 million barrels per day (bpd), a remarkable increase compared to the nearly 1 million bpd average in 2019, according to Homayoun Falakshahi, a senior analyst at Kpler, a data intelligence firm. Exports remained strong in May, as China “has taken advantage of lower oil prices to continue building stocks”, Falakshahi pointed out, while gradually reopening its economy.  

Basrah Light crude composed more than 90 percent of Iraq’s exports to China in April and May, according to Kpler. In a conversation with Ahmed Mehdi, a research associate at the Oxford Institute for Energy Studies, he highlighted that in addition to reopening the Chinese economy, another element that played a role in the surge of Basrah Light imports "was opportunistic buying for storage and the surge of trading activity on the Shanghai International Energy Exchange—where Basrah Light is a deliverable grade underpinning the contract." Last month, Reuters reported that some investors have been “filling commercial storage tanks held by” China’s Shanghai futures contract, as they bet on a rebound in oil prices.