Bloomberg News

China Buys More Iranian Crude in ‘Recent Months,’ IEA Says

February 20, 2012

(Updates with comment in third paragraph.)

Feb. 20 (Bloomberg) -- China bought an additional 200,000 barrels a day of oil from Iran in “recent months,” the International Energy Agency said.

The world’s second-biggest crude consumer may continue to increase imports from Iran, Didier Houssin, director of energy markets and security, said today in London. Iran is subject to a ban on its crude by European Union members from July.

“China has been buying more crude and may continue to do so,” he said at the International Petroleum Week conference. The IEA said on Feb. 10 that China’s purchases of Iranian crude would slow in the first three months of the year.

China’s oil demand is expected to increase by about 4 percent this year to 9.9 million barrels a day, according to the IEA’s last monthly report. It is currently seeking to replace supplies from Sudan, Eurasia Group, a New York-based researcher, said on Feb. 16.

Crude is trading at a nine-month high, partly because of concern that tensions between the West and Iran may disrupt shipments from the region. Iran halted oil sales to French and British buyers to preempt the EU ban, the Shana oil ministry news website reported, citing Alireza Nikzad Rahbar, a ministry spokesman.

The EU sanctions are so far having a “limited impact” on supply into the region as companies seek alternative sources and seasonal demand ebbs, according to the IEA.

Available Supply

“There is crude available” to replace Iranian supply, Houssin said. “Buyers are looking to Saudi Arabia, Iraq, Russia. Saudi Arabia has said it’s ready to produce more.”

Even an immediate cessation in shipments from Iran wouldn’t necessarily trigger a release of emergency reserves from IEA member states, Houssin said. The IEA released stockpiles last year in response to the drop in output from Libya.

Global oil markets are currently “slightly undersupplied,” Houssin said. OPEC’s spare production capacity is approaching “dangerously low” levels, David Greely, Goldman Sachs Group Inc.’s head of energy research in New York, said in a Feb. 14 report.

Iraq will raise supply by 250,000 barrels a day this year, constrained by export facilities, Houssin said. Iraq produced 2.75 million barrels a day last month, according to Bloomberg estimates.

--Editors: Rachel Graham, Raj Rajendran

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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