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Iraq Boosts Monthly Oil Sales to China by a Third Despite Virus. By Anthony Dipaola

February exports to China were the most in at least four years

Top Gulf Arab oil producers sustained sales to China in month

Iraq boosted oil sales to China by a third last month, even as the spreading coronavirus eroded demand.

OPEC’s second-largest producer shipped 1.32 million barrels a day to China in February, the most in at least four years, vessel-tracking data compiled by Bloomberg show. The increase in Iraq’s shipments more than offset reduced exports from the other three biggest Gulf Arab suppliers — Saudi Arabia, Kuwait and the United Arab Emirates.

Crude Sales to China

Middle East oil exports to China are holding up against the virus. So far

Source: Bloomberg tanker tracking

The reasons for the 315,000 barrel-a-day surge in Iraqi exports weren’t completely clear, though an increase in production in the country’s Kurdish region as well as at its big southern oil fields were contributing factors, according to Abu Dhabi-based consultant Jaafar Altaie.

“Part of it is good pricing, particularly for Kurdish crude, that is getting Chinese buyers to take advantage regardless of demand destruction,” said Altaie, managing director of Manaar Group.

Global oil demand is evaporating as the coronavirus, which originated in China, cuts airline travel, forces workers to stay at home and hits supply chains. Some analysts and traders are looking at scenarios of zero growth in oil demand this year. Refiners in China asked for less oil from some suppliers for March as storage tanks began to fill.

The virus’ effect on demand is forcing the Organization of Petroleum Exporting Countries and allies including Russia to consider additional production cuts of up to 1 million barrels a day when they meet this week in Vienna. Iraq has exceeded its promised production level for at least the past year, boosting output last month by 90,000 barrels a day to 4.61 million.

Ceyhan Jump

China emerges as one of the biggest buyers of Kurdish crude this year

Source: Bloomberg tanker tracking

China is emerging as one of the largest buyers of Kurdish crude this year. The semi-autonomous region in northern Iraq ships its crude by pipeline to the Turkish port of Ceyhan. China has been the biggest buyer of Kurdish crude for the last three months, and it nearly doubled purchases in February.

Most Iraqi oil flows from the country’s southern fields, where Chinese companies are partners in production ventures. Exports of Iraq’s main grades to China from the Gulf port of Basrah dipped in January and recovered in February, exceeding last year’s average level.

Basrah Boost

Exports to China from Iraq’s main port recover from December dip

Source: Bloomberg tanker tracking

The biggest oil producers in the Persian Gulf shipped 3.6 million barrels a day to China in February, tanker-tracking data show. That equates to just over a third of the crude that the Asian nation imported in 2019. It’s also slightly higher than the 3.5 million barrels a day that the same producers sold to China in January.

Most China-bound shipments are organized at least a month in advance, meaning any direct impact from the coronavirus on cargo flows might start to materialize in March data.

Source: Bloomberg, March 3, 2020,




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