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LONDON, OCTOBER 2, 2018 - Shipments of West African oil to
Asia are set to hit a two-month high in October as Chinese
refineries scramble for alternatives to Iranian crude before
U.S. sanctions take effect on Nov. 4.
Loadings for Asia will rise to 2.52 million barrels per day
(bpd) in October, equivalent to 75 percent of total output from
Angola, Nigeria, Republic of Congo, Ghana and Equatorial Guinea,
based on Reuters calculations, shipping brokers and Refinitiv
Eikon data.
This compares to September's 2.27 million bpd, which was
almost 70 percent of regional output.
China has been the main driver for Asian demand before the
implementation of U.S. sanctions that analysts estimate will
remove 500,000 bpd to 2 million bpd of Iranian oil from the
market.
Chinese imports from West Africa are set to rise to a record
1.94 million bpd, or 60 cargoes, in October from 1.5 million
bpd, or 45 cargoes, in September.
West African grades tend to produce a large proportion of
high-value distillates, such as diesel or jet fuel, much like
Iranian crude oil, making it an attractive replacement.
Other buyers across Asia and Europe have also said they
would cut back on purchases of Iranian oil, unleashing a burst
of demand for West African and other crudes rich in distillates,
such as grades from Saudi Arabia or the North Sea.
The looming deadline on Iranian crude is not the only factor
behind the surge in demand for October cargoes to China.
Independent Chinese refineries, known as teapots, eased up
on imports earlier in the third quarter for maintenance. Now
they are restocking before the end of the month, as their import
quotas are based on purchases made from January to October.
"The resurgence of Chinese teapot buying could not have come
at a more awkward time for the oil market," consultancy Energy
Aspects wrote.
"China was widely expected to need to restock. But its
renewed appetite for crude has been bolstered by panic buying
from teapots," the consultancy said.
Elsewhere in Asia, India is offering some respite for the
stretched West African market, buying about 451,000 bpd in
October, down from September's 500,000 bpd, while Glencore will
ship a rare suezmax cargo of West African crude to South Korea.
India's state-run refiners tend to take less West African
crude at tender and buy more on the spot market.
State firms Indian Oil Corp (IOC), Hindustan
Petroleum Corp Ltd (HPCL) and Bharat Petroleum Corp
Ltd (BPCL) will take 10 of the 14 India-bound cargoes.
Nigerian Agbami, Qua Iboe and Bonny Light make up the bulk
of the WAF exports to India.
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Below is a table of West African exports to major Asian
buyers:
Oct Bpd Sept Bpd
cargoes (Mln) cargoes (Mln)
China 60 1.935 45 1.5
India 14 0.452 15 0.5
Indonesia 2 0.065 3 0.10
Taiwan 1 0.032 0 0
S Korea 1 0.032 0 0
Japan 0 0.000 0 0
Others 0 0.000 6 0.167
TOTAL 80 2.516 69 2.267
