Iran's crude oil exports to Asian markets have fallen sharply since March this year, as Asian countries such as China prefer heavily discounted crude oil in international markets, causing tankers carrying a total of nearly 40 million barrels of Iranian crude to stop in the sea in Singapore waiting to find Asian buyers, According to Reuters reported on May 20.
Iranian tankers
Kpler, a global energy market data analytics firm, said that as of mid-May, Iranian oil reserves in floating storage facilities near Singapore had increased from 22 million barrels in early April to nearly 40 million barrels, about 20 ships carrying Iranian oil were moored near Singapore, and the number of Iranian tankers on the asian seas was currently climbing rapidly as more cheap oil from the international market sailed to the East.
As a result, iranian oil has also begun to attract international buyers at lower prices since February, with an average of about 1.5 million barrels per day in the first quarter, according to a report released by research institute Middleeasteye on May 16, but declined to give more details.
According to Kpler, Iranian oil exports grew faster than other Middle Eastern countries in the first quarter of this year, but began to decline in April, according to consulting firm FGE, in April, The daily export volume of Iranian oil is estimated to have fallen by 200,000 to 250,000 barrels, because the quality and price of Iranian crude oil must be discounted by $12-15 compared to the current high-quality crude oil in the international market.
According to shipping companies, Iran's exports to China in March were estimated at 700,000 to 900,000 barrels per day. According to reuters, citing comprehensive data from S&P global data and global shipping industry expert Vortexa Analytics, Iran sold more than 22 million tons of oil to Chinese buyers in the 24 months to April, and the analysis showed that some of these transactions were settled in renminbi. Iran's oil has long relied on Asian energy buyers to buy oil since it was cut back by the dollar's restrictions on settlement.
Chinese energy buyers are looking to replenish their strategic crude reserves with cheap international oil, according to data disclosed by the Financial Times on May 12, according to bloomberg reports on May, Chinese buyers have bought crude oil and petroleum products in some countries about 86,000 barrels higher than the average in the same period last year.
An oil depot at a port in Zhuhai
According to the latest data released by China Customs in May, China's crude oil imports in April increased by nearly 7% compared with the same month last year, which was the first increase in three months, importing 43.03 million tons of crude oil, equivalent to 10.5 million barrels per day (bpd), compared with 9.82 million barrels per day in April 2021 and 10.06 million barrels per day in March this year, which also brought China's total crude oil imports from January to April this year to 170.89 million tons, or about 10.4 million barrels per day.
China is the world's second-largest crude oil consumer and largest crude oil importer, accounting for 44% of the growth in global oil demand. According to the National Petroleum Reserve Medium- and Long-Term Plan, China will form a strategic oil reserve equivalent to 100 days, and at present, the global oil market is in a sensitive environment, and China's oil companies will have the ability to ensure the supply of refined oil products.
BWC Chinese.com Financial Research Team published an article on May 10 that the variable of China's monthly strategic petroleum reserves can be calculated by adding the total amount of crude oil produced domestically from imported crude oil and subtracting the amount of crude oil processed by Chinese refineries, according to this method, we conclude that in the first quarter of this year, Chinese energy companies added about 610,000 barrels of crude oil reserves per day to their commercial or strategic inventories.
According to the comprehensive statistics released by the National Bureau of Statistics and customs, according to the above methods, China's strategic crude oil reserve capacity increased by about 170,000 barrels per day last year, and about 1.26 million barrels per day in 2020, which means that since the first quarter of 2022, China has begun to resume increasing oil reserves.
In the field of oil trading settlement, the RMB-denominated crude oil futures turned out to be strong after the daily trading volume performance, but also began to drive the activity of the European and American and other markets night market, and even some of the American traders involved in the survey told the BWC Chinese network reporter that they are now going to start frequent night watching, it is clear that the RMB crude oil futures fill the gap in the Asia-Pacific crude oil market, and improve the price and time zone linkage mechanism in the international crude oil market.
Reuters also said on May 10 that since March 2018, the rmb crude oil futures contract was listed and issued, the sense of international presence has been rising, at the same time, the market share of the petrodollar has also declined, the foreign media further said that next, Chinese buyers intend to start to more participants with the rmb settlement to buy oil, at this point, it means that the crude oil currency rising star "oil yuan" is rising.
According to the latest data provided to BWC Chinese reporters a week ago, in the 15 months as of April 30, the cumulative trading volume of crude oil futures increased by 2.97% year-on-year to 57 million lots, and the transaction amount increased by about 55% year-on-year. The market size is second only to the US crude oil futures WTI and Brent crude oil futures Brent, and the latest global energy commodity futures and options trading volume ranking released by the International Futures Industry Association (FIA) rose to 13th.
At present, it has covered more than 20 countries and regions around the world, a total of 68 international brokerage companies have launched RMB crude oil trading services, and 75 overseas intermediaries have been recorded, which has attracted participants from countries and regions including the United Kingdom, Switzerland, Singapore, the United Arab Emirates and other countries and regions, which reflects the increasing influence of the renminbi on the international crude oil market.
This will mean that in the future, more international institutional investors will enter the Shanghai crude oil futures market, support China's real economy, and is expected to become the benchmark for Asian crude oil pricing, and at present, in the crude oil trading in the Asia-Pacific region, the function of the RMB crude oil pricing market has emerged (according to the World Energy Blue Book jointly released by the Chinese Academy of Social Sciences and other institutions).
Therefore, according to Reuters' analysis, the rmb-denominated crude oil futures have not only achieved the top three results in the world in terms of crude oil futures trading volume, but also, China's oil giants have signed the first yuan-denominated Middle Eastern crude oil import agreement, and plan to sign more such agreements in the future, and expand the pilot program, so as to provide international energy participants with another oil currency option, but also for investors who bypass the demand for petrodollars, which will change the global crude oil market.
Therefore, according to the analysis of the foreign media, next, international participants, including Iran, Indonesia, Angola, etc., will use more rmb and Chinese buyers for transaction settlement, according to the interpretation of the Nikkei Asia Review, the Asian market is best to use rmb and yen for settlement and trading oil, and this new change provides convenience for more oil trading and reserves.
Rochelle Wei, CEO of JPMorgan Chase Futures, further said that as China continues to open up the futures market and launch new varieties, the RMB futures market will play a more important role in the global market, and more overseas investors will join, according to Saxo Bank's latest forecast, many oil-producing countries are more than happy to settle with the RMB as the oil trading currency, as China maintains the value of the RMB.
Some market participants estimate that if more international crude oil market participants join, they could increase the volume of oil yuan transactions worth about $600 billion to $1 trillion per month, and the number and scope of international payments using renminbi may increase as some international crude oil sellers consider diversifying the dollar risk.
In particular, the time is ripe for the adoption of digital currencies in China's crude oil commodity retail and futures markets, and it is clear that China's version of digital currencies will enhance the breadth and depth of serving the global economy and can play an alternative role in the transformation of the international settlement system.
In this regard, Reuters is more blunt, saying that before, whether it is Russia, Japan, India or the United Arab Emirates launched crude oil futures products, the challenge of weakening the market share of petrodollars has failed, but the Chinese version of the RMB crude oil futures has successfully done what others have tried in vain and have not done so far.
Of course, friends should also be soberly aware that the petrodollar will not immediately lose its dominance, it will be a slow process, after all, 80% of the world's oil is traded in US dollars, in addition, the choice of which oil currency is determined by the market.
Oil storage tanks at the Shanghai Yangshan Port Oil Depot
More importantly, however, the large-scale purchase and settlement of imported oil by Chinese energy buyers in renminbi will also help speed up the storage of the Strategic Petroleum Reserve and directly help hedge the cost of energy imports and oil price premiums caused by the sharp fluctuations in the US dollar exchange rate, but these will be a long way to go for the oil renminbi, which has only been born for four years. (End)