And U.S. barely retightens oil policy clamps it had loosened on Venezuela
April 18, 2024
Key Observations:
From January 2021 through February 2024, China imported zero barrels of crude oil from Iran in 34 of 38 months, according to data from China's Customs General Administration (CGA). Data from Iran's national oil company (NIOC) show Iran exported crude oil to China in 32 of those 38 months. In the chart below, this discrepancy is visible in the blue dots. From July 2015 through December 2020, the CGA and NIOC data align well by quantity and time. For the past three years, they do not.
But this is only half the story. Since January 2021, and especially since September 2022, CGA has reported a remarkable increase in China's crude imports from Malaysia. We and others spotlighted this curiosity last summer*. It does not escape our attention how well the CGA data for crude imports from Malaysia (plus zero imports from Iran) fit over the past six months with dispassionate trackings of Iran's total shadow crude oil exports (orange dots).
This is the context for the current debate about retightening U.S. sanctions on Iran's crude oil exports: those flows are running at about 1.5 million b/d, of which >90% are China-bound.
Meanwhile, U.S. Treasury has elected to reimpose sanctions on Venezuela's oil and gas sector, with effect 45 days from yesterday. The U.S. will continue to exempt "limited" production growth and exports by Chevron under its November 2022 license. Export volume at risk is trivial: <25 thousand b/d.
Implications for investors: impact on oil supply is negligible. New U.S. sanctions on Iran are directed, so far, only at individuals and firms working in steel and armaments, not the flow of oil.
Source: Bloomberg, CGA, NIOC, PdVSA, Blacklight Research. *China's trend crude oil imports leave bull case intact (8-Aug-2023), Iran and oil, in context (10-Aug-2023), Iran's crude oil exports by destination (9-Oct-2023), and U.S. has already eased oil sanctions on Venezuela (10-Oct-2023).
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