The amount of oil held in floating storage at Asian ports is growing, with Iranian and Venezuelan crude cargoes earlier this month pushing Asian floating inventories to the highest in three months, according to data from energy intelligence provider Kpler, as quoted by Bloomberg.
By Oil Price – Irina Slav
Aug 24, 2021
The glut follows China’s crackdown on independent refiners – the so-called teapots – which have come to account for a solid portion of total Chinese crude oil imports. This year, however, Beijing has targeted the independent refiners with tax evasion claims, environmental violations investigations, and production curbs amid excessive production of fuels that has pressured margins for all refiners in the country.
This environment in China suggests that the 62 million barrels of crude—per Kpler—sitting at Asian ports as of last week will have trouble finding a home.
“These barrels sitting off Southeast Asia are distressed,” Anoop Singh, head of East of Suez tanker research at Braemar ACM Shipbroking, told Bloomberg. “They’re going to have a tough time finding homes other than China, unless the situation surrounding the U.S. sanctions changes dramatically, or China’s clampdown on its independents is eased.”
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