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Despite a marginal decline in overall crude oil exports, Iraq has boosted the sales of its crude to top Asian importers China and India since late September, as the confusion over the return of full Saudi capacity after the attacks made other Middle Eastern producers more popular in Asia.
After the September 14 attacks on vital Saudi oil infrastructure, which cut 5.7 million barrels per day—or around 5 percent of daily global supply— offline, “Iraq seems to have quickly stepped in and sold crude oil to China and India since late September,” Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade, at IHS Markit, wrote in a commentary on Monday.
Most of Iraq’s exports continued to be shipped via very large crude carriers (VLCCs) capable of carrying up to 2 million barrels of oil. But the share of Suezmax tankers—such capable of shipping up to 1 million barrels of oil—fell at the expense of Aframaxes, smaller tankers carrying between 500,000 and 800,000 barrels. The reason for this, IHS Markit’s Katsoulas says, was that shippers considered chartering smaller vessels after tanker rates soared in late September and early October following the U.S. sanctions on Chinese tanker owning firms.
The cost of chartering supertankers to carry crude oil from the Middle East to Asia soared by double digits overnight on the day following the announcement of sanctions as oil traders and shippers scrambled to understand the extent and impact of the U.S. sanctions.
Going forward, one major concern about Iraq’s oil production and exports is how the anti-government protests will develop and whether they would threaten oil output or export facilities, IHS Markit said.
Iraqi oil production and exports remain at stable levels, Iraq’s Oil Minister Thamer Ghadhban said in a statement this weekend, as carried by Reuters.
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.