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Is $2,000 Gold On The Horizon?

Is $2,000 Gold On The Horizon?

With global stock markets descending…

China May Consider Sending Navy To Protect Oil Tankers In Gulf

Kharg Island

The world’s top oil importer China could consider sending navy ships to the Persian Gulf to protect its commercial vessels in the area, should the situation become “very unsafe,” China’s Ambassador to the UAE, Ni Jian, told Reuters on Tuesday.

“If there happens to be a very unsafe situation we will consider having our navy escort our commercial vessels,” Ni told Reuters, while the Chinese Embassy in the United Arab Emirates said later in a text message to Reuters that China was studying the U.S. proposal on escorting commercial ships in the Gulf.

The Strait of Hormuz in the Gulf is the most important oil chokepoint in the world with daily oil flows averaging 21 million bpd, or the equivalent of 21 percent of global petroleum liquids consumption. According to EIA estimates, 76 percent of the crude oil and condensate that moved through the Strait of Hormuz last year went to Asian markets, with China, India, Japan, South Korea, and Singapore the top destinations.

The U.S.—whose President Donald Trump said in June that countries that get their crude oil via the shipping routes in the Middle East should protect their own ships along the lanes—is trying to garner a broad international support for escorting oil tankers in the Gulf after a spate of recent attacks. However, so far only the UK has said it would join the U.S. in protecting tankers after a UK-flagged tanker was seized by Iran last month.

Another key oil importer in Asia, South Korea, is said to be preparing to send a naval unit, including a destroyer, to the Strait of Hormuz to help protect free tanker movement through the crucial oil transit point in the Middle East.

A week before that, Khalid al-Falih, the energy minister of the world’s largest crude oil exporter and OPEC’s biggest producer, Saudi Arabia, urged countries buying crude oil to secure the free navigation of tankers in the Strait of Hormuz. 

By Tsvetana Paraskova for Oilprice.com

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  • Andrew Remillard on August 07 2019 said:
    It looks like China is getting ready to import all of Iran's excess inventory currently being blocked from the market by US sanctions.
  • Mamdouh Salameh on August 06 2019 said:
    China’s oil tankers and commercial vessels passing through the Strait of Hormuz face no threat whatsoever and therefore there is no need for China to send its Navy warships to escort them.

    The only threat to China’s oil shipments would come from the United States but only at times of war between the two countries when the US will try to starve China of oil from the Gulf. But such a situation could emerge 15 years from now as part of a rivalry for ascendency in the world between the United States and China.

    China already has some naval vessels in the Gulf of Aden on anti-piracy duty.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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