The upcoming import tax regime is a likely cause
Just days before Beijing’s oil tariffs regulations kick in, China’s private oil buyers appeared to have paused its purchases. As a result, five tankers loaded with 6 million barrels of North Sea Oil are drifting off European waters.
Swift slowing in demand
China is known to be actively scooping up oil, even to the extent of purchasing those “packaged” as Malaysian. The media found the cargoes onboard the five tankers comprised 5.4 million barrels of Forties crude – meant for China’s private oil buyers. 2 VLCCs chartered by Vitol Group are reportedly among the five stranded vessels. They are namely Elandra Everest and Apollonas.
The pause is speculated to be in anticipation of the next import quotas for 2021. Moreover, traders monitoring the pricing window of S&P Global Platts also observed reduced bidding activities for North Sea oil. From a macro-perspective, China has been the dominant oil importer. Its recent iron ore buying frenzy might have popped a red flag internationally about stockpiling. It has the means to stockpile iron ore, but not for oil. Besides, China accounts for only 14 per cent of the global oil market. Hence, it would not be surprising if the country decides to slow down its oil focus.
Chinese authorities also ordered state-run PetroChina to cease trading off crude oil import quotas to curb excessive fuel production. PetroChina Fuel Oil Co Ltd is a major crude oil supplier to China’s independent refineries. This move will reduce the country’s crude imports by 3 per cent.
Illegal trading of import quotas has been a regular practice and PetroChina Fuel Oil is one of the infamous doers. A government official said, “China is taking a lot more seriously carbon emissions this year, and see large crude oil imports and large refined fuel exports as something unsustainable.” Not surprising, an official from PetroChina claimed he was not aware of the situation and was unable to comment.
Marine Online Media Team
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