Russian, Iranian Oil Prices to China Rise Post Venezuelan Sanction Waver

Sellers of sanctioned oil from Russia and Iran are hiking offer prices to China, after the suspension of US sanctions on Venezuela raised Venezuelan oil prices, trade sources told Reuters.

• So far, only one deal for Venezuelan crude to China in January has been spotted, two Chinese market sources said, at a discount of $11/bbl against ICE Brent on a delivered basis. That compares with discounts as deep as $14/bbl a month earlier and around $20/bbl when the US sanctions were in place.
• Venezuela ships mostly heavy sour grades to China, including Merey and Boscan. These were on average more than $7/bbl cheaper than medium-sour Iranian Light crude and more than $10/bbl than light-sweet Russian ESPO crude over the past year, according to traders.
• Chinese teapots have been looking to buy the next cheaper oil from Russia and Iran. Demand from Chinese buyers for sanctioned barrels is expected to rebound in early 2024, the China issues new import quotas.
• "Iran and Russia have seized a good timing to hike prices, which will undoubtedly help them to increase their revenue," a China-based trader said.
• ESPO Blend oil cargoes loading in January traded at parity to a premium of 10-30ct/bbl to ICE Brent at Chinese ports on a delivered basis, according to the traders, rebounding from small discounts for December-loading cargoes.
• "Chinese demand is back. They actively ask for ESPO, and Urals is also considered," said one Russian oil seller.
• The bullish sentiment also supported demand and prices for Iranian oil, traders said. Iranian oil discounts narrowed sharply to $6/bbl against ICE Brent, from $13/bbl two months ago, traders added.