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The Olympic Target supertanker, carrying two million barrels of Iranian crude, is en route to the eastern Chinese port of Shandong, Reuters reports, citing sources in the know. The load will be supplied to small independent refineries called teapots, which have been gaining prominence over the last couple of years.
Iran’s national Oil Company (NIOC) sold the cargo to global oil trading giant Trafigura late in June. This makes Trafigura the first among its peers to start selling crude to Chinese teapots. Neither the trading firm, nor NIOC, however, responded to Reuters’ requests for comment.
In any case, this move confirms Iran’s intentions to regain its global market share—not soon, but sooner—and it’s been quick to orient itself correctly in terms of demand. Just a few months ago, Saudi Arabia, OPEC’s biggest exporter, started selling crude to China’s teapots on the spot market—something it had never done up to that point. This turned the spotlight firmly on teapots: refineries that until recently had to make do with whatever crude they could get their hands on but have now been allowed their own import quotas by Beijing. A lot of the fuels they produce are then exported.
Iran, which is Saudi Arabia’s possibly greatest rival in the region, seems to have followed events and trends closely, jumping on the teapot bandwagon as soon as it got the chance. According to Reuters’ sources, Tehran only agreed to sell the cargo to Trafigura on condition that it would ship it to China’s teapots.
Though the Saudis had historically been China’s biggest oil supplier, Russia has managed to take the top spot several times since, thanks to the teapot refineries. The fight for the Chinese market is raging with full force between the world’s top two exporters, and now it seems they have a new rival to contend with in the face of Iran.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.