Oil stockpiles at sea hit turning point as Chinese demand rises

Muscat: A surge in shipments from countries under Western sanctions, notably Iran and Russia, combined with subdued buying from China had earlier created a glut of oil floating in Asia, the world’s largest consuming region. This oversupply weighed on crude prices and helped cushion the immediate impact of supply disruptions from Venezuela.

Data from Kpler shows floating oil storage in Asia reached about 70.9 million barrels on December 18, the highest level since June 2022, up sharply from around 21 million barrels in early September. Iranian crude accounts for more than half of this total, with cargoes estimated at 38.9 million barrels.

Iran’s oil exports exceeded 1.9 million barrels per day in September and October, the highest since mid-2018, before easing to 1.8 million barrels per day in November and around 1.1 million barrels per day so far in December, according to Kpler data.

Venezuelan exports have also fallen sharply after the United States seized an oil tanker off its coast earlier this month. Although Venezuelan oil represents about four percent of China’s imports, its long transit time, roughly 60 days, has helped soften the impact of any prolonged disruption.

Meanwhile, Russian oil exports declined in October and November following Ukrainian attacks on ships and oil infrastructure. Exports fell to 4.71 million barrels per day, down from 5.01 million barrels per day in October and 5.16 million barrels per day in September, according to the International Energy Agency.

Western sanctions imposed in October on two of Russia’s largest oil companies further reshaped trade flows. Chinese state-owned firms and Indian refiners halted purchases, forcing some Russian cargoes to be diverted to China’s coastal Shandong province, where independent refineries stepped in as buyers.