China will cut imports of West African oil to the lowest in seven months in November due to the higher cost of shipments, while South Korean imports from West Africa will reach to an 11-year high as US sanctions hit Iranian crude supplies.
West African loadings to Asia will fall to about 2.33mn barrels per day (bpd) this month, equivalent to 70% of total exports from Angola, Nigeria, Republic of Congo, Ghana and Equatorial Guinea, based on Reuters calculations, shipping brokers and Refinitiv Eikon data.
This compares to October’s 2.52mn bpd, or 75% of total regional exports.
Demand from Asian refiners for Nigerian and even Angolan crude, which tends to be favoured by Chinese buyers, sagged over the course of October and early November, as higher shipping costs made the trip uneconomical.
Shipping rates for carrying West African oil on a very large crude carrier (VLCC) to China hit a nine-month high in October of more than $50,000 a day.
The International Energy Agency said in its report this month that falling Iranian exports, driven down by US sanctions, were pushing Asian refiners to source oil from further afield with longer journey times, driving up shipping costs.
US investment bank Jefferies said average VLCC spot charter rates rose to more than $40,000 a day in late October for the first time since the fourth quarter of 2016.
China will import about 1.33mn bpd of mostly Angolan crude in November, down from October’s record 1.935mn bpd, while South Korea will take about 167,000 bpd of West African oil.
South Korea has till now typically taken only occasional West African cargoes, because it has tended to rely more heavily on Middle East or North Sea suppliers.
But it has now said it would cut Iranian purchases because of US sanctions on Iran and has sought out other suppliers, starting with a cargo of Congolese Djeno that loaded this month.
India’s refiners will take 567,000 bpd of West African crude in November, up from 452,000 bpd in October, most of which was purchased via tenders rather than on the spot market.
Glencore, Shell, Norway’s Equinor and Chevron, among others will supply the Indian market with a combination of Nigerian and Angolan grades.
Oil tanks are seen at a warehouse at Yangshan port in Shanghai. China will import about 1.33mn bpd of mostly Angolan crude in November, down from October’s record 1.935mn bpd.
