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Asian oil customers are looking to secure more oil supplies from Saudi Arabia, Kuwait, and Iraq, to replace oil from Iran after the U.S. announced the new sanctions on Tehran, Nizar al-Adsani, CEO at Kuwait Petroleum Corporation (KPC), told Reuters on Monday.
“There is demand now ... as sanctions are implemented on Iran ... Some of the companies are trying to find other options other than Iran, be it the kingdom (Saudi Arabia), Emirates, Iraq or Kuwait,” al-Adsani told Reuters on the sidelines of a China-Arab summit in Beijing.
According to the manager, KPC, the national oil company of Kuwait, has recently boosted its production by 85,000 bpd, in line with last month’s OPEC agreement to increase production, worded as ‘easing compliance rates.’ Any additional increase would depend on OPEC, the head of the Kuwaiti oil company told Reuters.
After the U.S. signaled two weeks ago that it would take a harder line against Iranian oil exports and would push for ‘zero’ oil exports from Iran, Asian buyers have stepped up efforts to diversify their Middle Eastern crude oil imports and look for alternatives to crude oil from Tehran.
Japanese refiners are considering stopping oil imports from Iran, and Japanese shipping companies have decided in principle not to accept Iranian oil cargoes from August onwards, in order to clear any payments before the U.S. sanctions on Iran kick in in early November. Asian buyers, however, do not seem overly concerned about a supply shortage, because Saudi Arabia and other Middle Eastern oil producers can provide similar-quality grades, according to Platts.
Indian refiners are also preparing for any scenario in case they won’t be able to import any Iranian crude oil, and some of the largest Indian buyers of Iranian oil have a wide basket of alternative grades.
South Korea, for its part, is said to have suspended all buying of Iranian crude and superlight crude, more commonly known as condensate, after the U.S. stepped up pressure on Iranian customers to stop importing its oil. South Korea has since denied the reports.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.