China has bought enough spot crude from the Middle East, Africa and Russia for January to replace lost Iranian oil supply, trade sources said yesterday, putting it in a strong position as it tussles with the Islamic Republic over payment terms for 2012 contracts.
China will load an additional 12.43 million barrels of crude from Iraq, Russia and West Africa in January, more than covering a 285,000 barrels per day (bpd) supply cut from Iran, according to trade sources and shipping data.
Sinopec, the country's top refiner, cut its crude shipments from Iran for January as the two haggle over terms for next year's supplies.
A long-term decline in exports to the world's second-largest oil consumer would be a major blow for Iran, as China is the largest customer for its crude sales, which are under increasing threat from growing US and EU sanctions.
"The last Opec meeting basically went the way of the Saudis so the market is less tight at a time when Iran is getting squeezed by sanctions," Alex Yap, an analyst at Facts Global Energy, said.
Opec on December 14 agreed to an output target of 30 million barrels daily, ratifying current production at near three-year highs as the world's top exporter Saudi Arabia ramped up output in November to the highest in three decades.
To replace part of the lost Iranian supply, Sinopec's trading arm Unipec bought two more VLCCs of Iraqi Basra Light for January, doubling the volume it typically buys each month, trade sources said.