Gulf News reported that for all the headlines over the threat to oil shipments from Iran as Western sanctions ramp up it seems the crude market is doing what it does best: getting on with business.
That is to say both buyers and sellers are adapting to the new realities and seeking to maximize their advantage while ensuring that everybody gets the oil they need.
They are the top buyers of Iranian crude, usually taking about 20% of the Islamic republic's exports or some 550,000 barrels per day. But this was cut by 285,000 barrels per day in January and February and according to sources the Chinese will extend the reductions for a third month in March.
At the same time China's refiners appear to be putting the knife into Iran, presumably as they seek better terms, the nation's political leaders are saying the West should back off from Iran and that putting sanctions on the oil trade isn't the solution to the nuclear problem.
What this shows is that China is seeking to maximize its own position in the situation. It cannot stop Europe and the US from trying to end Iran's nuclear program but China can benefit from the process. And it would be wrong to think the Chinese are alone in this virtually everybody in the physical oil markets is also trying to work out how best to profit.
Record amounts of West African crudes will be shipped to Asia in the first quarter with estimates reaching 1.82 million barrels per day up from 2011's average of 1.57 million. Russia the world's top oil producer is also eyeing selling more oil in Asia adding to its existing market for its Eastern Siberian Pacific Ocean crude.
Indian refiners, the second largest buyer of Iranian oil last year at 341,000 barrels per day are apparently happy to keep buying, but at the same time making it clear the Iranians will have to keep their prices low in order to get the business. It's also likely that Saudi Arabia is seeking to maximize its position as the world's top exporter. What this tells you that behind the drama of the news headlines, the oil market is getting on with the job.
(Sourced from Gulf News)
