How Donald Trump Is Rerouting the World’s Oil Tankers: Report


It’s not yet clear to what extent China will curb shipments of Iranian crude due to US sanctions.

US President Donald Trump is redirecting global oil flows.

West African and Latin American producers are sending ever-growing volumes of crude to China. America’s exports to the Asian country have slumped in favor of its neighbors. There’s an urgent global need to find replacement barrels for Iran’s, whose exports might just collapse next month.

The thing that connects the shifting flows is Trump’s foreign policy. China’s slumping purchases of American crude — and its extra buying from elsewhere — have coincided with a trade war between the US and the Asian country. Likewise, reimposed sanctions on Iran, which start November 4, have increased the need for the type of heavy, sour crude that the Persian Gulf state sells.

“If you combine the impact of US sanctions on Iran and the US trade war with China, it is Trump’s foreign policy which is reshaping oil flows,” said Olivier Jakob, managing director of consultancy Petromatrix GmbH. “The US is becoming a great energy power and they will use that, we are starting to see the implementation of that in different parts of the energy scene, part of that is being seen today in the oil flows.”

Oil markets are also grappling with record US output, fueled by shale production, and America’s removal in late 2015 of longstanding crude-export limits. Those shipments — just a few hundred thousand barrels a day a few years ago — now consistently top an average of 2 million barrels a day each month. American crude increasingly flows to markets in Asia, Europe and Latin America, data from the US Energy Information Administration show.

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Shifting Flows
But there have been recent changes in precisely where those barrels are going. China, the world’s largest energy consumer, in August didn’t import any US crude for the first time since September 2016, according to the most recent data from the US Census Bureau. That compares with almost 12 million barrels in July, when China was the second-largest recipient.

Shipments to South Korea soared to a record 267,000 barrels a day in August — a 313 per cent year-on-year increase, according to Bloomberg calculations from Census data. Volumes to Japan and India rose by 198 per cent and 165 per cent, respectively. Exports to the UK, Italy and the Netherlands have also surged this year.

“The pattern of trade does look as though it’s going to ebb away from a focus on China to other Asian countries, and Europe,” said Caroline Bain, chief commodities economist at Capital Economics.

China is also increasingly turning to other regions. Colombian exports to the Asian nation rose fivefold in September, while Brazilian shipments hit their highest level this year. Chinese refiners bought 1.71 million barrels of crude a day from West Africa for October loading, the most since at least August 2011.

Sanctions’ Effect
It’s not yet clear to what extent, if any, China will curb shipments of Iranian crude due to US sanctions. However, buyers in India, Japan and South Korea are reducing purchases from the Persian Gulf state. Saudi Crown Prince Mohammed Bin Salman said that the kingdom and other OPEC producers are making up for lost supply from Iran.

The demand for replacement crudes is apparent. Exports from Oman last month rose to their highest levels this year on healthy demand from China, Bloomberg tanker-tracking showed. Kuwait is directing more flows to Asia, while its shipments to the US by late September all but dried up — the first time that’s happened since the Gulf War of 1990-91.

The curbs on Iran are having an effect on oil prices, with global benchmark Brent trading now trading near its highest level in four years. Oman was the talk of one of the oil market’s biggest gatherings last month, as its crude surged past $90 a barrel. Supertankers, which often benefit when trade flows are dislocated, are earning the most since early 2017.

Flows from Iran could drop by 2 million barrels a day, to below 1 million barrels day in November and possibly December, Energy Aspects Ltd. said in a report dated October 1.

Whether it’s the need he’s created for replacement supplies from Iran, or other actions by the US, president Trump’s policies are now having a direct impact on where oil is flowing, said Eugene Lindell, an analyst at JBC Energy GmbH in Vienna.

“What you can say beyond doubt is that it’s creating lots of exotic trade flows that hadn’t been in the market before,” he said. “It’s been a major influence that has forced a change in trade flows.”

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)





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India Allows Refiners To Use Iran Tankers, Defies US Sanctions Pressure


India wants to continue buying oil from OPEC member Iran as Tehran is offering almost free shipping.

New Delhi: 

India is allowing state refiners to import Iranian oil with Tehran arranging tankers and insurance after firms including the country’s top shipper Shipping Corp of India (SCI) halted voyages to Iran due to US sanctions, sources said.

New Delhi’s attempt to keep Iranian oil flowing mirrors a step by China, where buyers are shifting nearly all their Iranian oil imports to vessels owned by National Iranian Tanker Co (NITC).

The moves by the two top buyers of Iranian crude indicate that the Islamic Republic may not be fully cut off from global oil markets from November, when US sanctions against Tehran’s petroleum sector are due to start.

President Donald Trump ordered the reimposition of economic curbs after withdrawing the United States from a 2015 nuclear deal between Iran and six world powers. No one trading with Iran will do business with America, he said.

“We have the same situation (as most Western shippers) because there is no cover, so we cannot go (to Iran),” an SCI official told Reuters.

New Delhi turned to the NITC fleet after most insurers and reinsurers had begun winding down services for Iran, wanting to avoid falling foul of the sanctions given their large exposure to the United States.

SCI had a contract until August to import Iranian oil for Mangalore Refinery and Petrochemicals Ltd (MRPL), two sources familiar with the matter said.

Eurotankers, which had a deal with MRPL to import two Iranian oil cargoes every month, has also said it cannot undertake Iranian voyages from September, the sources said.

The sources spoke on condition of anonymity as they were not allowed to talk to the media about commercial deals.

“The shipping ministry has given refiners permission to buy Iranian oil on a CIF (cost, insurance and freight) basis,” a government source said.

Under a CIF arrangement, Iran would provide shipping and insurance, enabling Indian refiners to continue purchases of the country’s oil despite the non-availability of cover from Western insurers due to the restrictions imposed by Washington.

The move would benefit Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and MRPL, which plan to lift Iranian cargoes during the rest of the fiscal year ending on March 31.

India wants to continue buying oil from OPEC member Iran as Tehran is offering almost free shipping and an extended credit period.

State refiners, which drove India’s July imports of Iranian oil to a record 768,000 barrels per day, had planned to nearly double oil imports from Iran in 2018/19.

Unlike their private peers, India’s state-run refiners need government permission to import oil on a delivered, or CIF, basis. Federal policy requires them to favour Indian insurers and shippers by buying only on a free on board (FOB) basis.

The permission for CIF purchases applies only to existing annual contracts with Iran, the government source said.

India, Iran’s top oil client after China, will finalise its strategy on crude purchases from Tehran after a meeting with top US officials this week, a senior government official told Reuters last week.

SCI, Eurotankers, the shipping ministry, MRPL, IOC and BPCL did not respond to Reuters emails seeking comment.

© Thomson Reuters 2018

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)





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Haryana Orders Supply Of Water To Parched Areas Through Tankers


Haryana government has directed officials to ensure tankers supply potable water to all areas

Chandigarh:  As temperatures continue to rise in Haryana, the state government has directed officials to ensure tankers supply potable water to areas facing a scarcity.

The order was given last evening by Haryana’s Public Health Engineering Minister Banwari Lal at a departmental meeting attended by the state’s superintending engineers, an official statement said.

The temperature has stayed above the 40-degree mark in most parts of Haryana for days. Hisar was the hottest yesterday with a high of 45.5 degrees Celsius.

With monsoon expected to reach the state by the end of June, flood preparedness was also discussed in the meeting.

The officials were directed to ensure that sewers, inlet channels and tanks were cleaned in time to prevent waterlogging during rains. The problem, they said, is very common in Rohtak.

The minister also ordered regular collection and testing of water samples to prevent the spread of vector-borne diseases.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)





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