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OIL: Shandong Sanctioned Ship Ban Bullish for Oil: Platts

OIL
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China’s ban on vessels sanctioned by the US from docking in Shandong is bullish for crude prices, according Zhuwei Wang, Associate Director, Oil Markets at Platts.

  • Refineries in Shandong must find non-sanctioned ships for the final leg of their deliveries or look for other crude sources, he said. This could tighten the oil market.
  • The big change comes as around 20%-30% of crude oil inflows into Shandong last year were transported by sanctioned ships.
  • The peak volumes were around 1m b/d in May last year, before falling below 500k b/d recently.
  • “If China is not going to buy these volumes, no one else will. Hence, it will not be a surprise if floating storage around the Middle East and Malaysia will rise in the coming weeks,” Wang said.
  • On the other hand, weak oil demand growth and surplus refining capacity in China will mitigate the potential hikes of crude oil prices in the coming months.
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China’s ban on vessels sanctioned by the US from docking in Shandong is bullish for crude prices, according Zhuwei Wang, Associate Director, Oil Markets at Platts.

  • Refineries in Shandong must find non-sanctioned ships for the final leg of their deliveries or look for other crude sources, he said. This could tighten the oil market.
  • The big change comes as around 20%-30% of crude oil inflows into Shandong last year were transported by sanctioned ships.
  • The peak volumes were around 1m b/d in May last year, before falling below 500k b/d recently.
  • “If China is not going to buy these volumes, no one else will. Hence, it will not be a surprise if floating storage around the Middle East and Malaysia will rise in the coming weeks,” Wang said.
  • On the other hand, weak oil demand growth and surplus refining capacity in China will mitigate the potential hikes of crude oil prices in the coming months.