Iran sells its oil to China at a deep discount
According to a media report, the Islamic Republic is selling Iranian oil at a price three to five dollars below Brent crude due to a lack of buyers. The country's oil exports to China this month are estimated at about one million barrels per day.
Bloomberg reported on Tuesday, March 16, that Iran, by selling cheap oil, is preventing OPEC from implementing its plan to supply less volume to the global market.
Iran is exempt from OPEC's restrictions on crude oil production.
Bloomberg, citing oil traders and analysts, wrote that China imports about one million barrels of crude oil and diesel from Iran daily, the highest amount in the last two years.
According to oil market participants, the price of Iranian oil in China is usually between $3 and $5 per barrel below the Brent crude benchmark, a difference that has caused local companies to quickly purchase and store Iranian oil in response to rising global prices.
According to a Bloomberg report, some of the shipments that reach China are loaded directly at Iranian ports, and some are sold as products from other countries.
It is said that the two companies, CNPC and Sinopec, which have developed the Azadegan and Yadavaran fields in Iran, receive a portion of Iran's exported oil to settle the country's debt, and no money is received by Iran for it.
Sales through intermediaries
China is the world's largest buyer of oil. The country's buyers of Iranian oil are trading companies because the country's state-owned and private refineries refuse to deal directly with the Islamic Republic due to US sanctions.
Iran's cheap sales are putting its oil rivals, such as Angola, Brazil and Norway, out of business. Bloomberg writes that about 10 million barrels of Angolan oil scheduled for export next month had not found a buyer as of Monday.
Three giant Norwegian oil tankers have been waiting off the coast of China for two weeks to be unloaded.
A Bloomberg report states that most refiners and oil brokers around the world are reluctant to buy Iranian oil because they fear a punitive response from the United States.
Source: DW
