Millions of barrels of Iranian crude oil sitting in Chinese ports could disrupt oil markets if Beijing decides to actually use them.
According to ship tracking data, Iranian oil tankers have been secretly offloading oil supply into Chinese ports despite U.S sanctions on Iran. The move is said to be in retaliation to the latest U.S. tariff measures against China.
It is estimated that 12 million to 14 million barrels of Iranian crude has made it to the China ports between January and May, an amount that could dramatically impact the price of oil, according to market watchers.
Bank of America (BofA) has warned that oil prices could crash by US$30 if China buys Iranian crude.
CNBC reports that: “If China were to aggressively purchase Iranian crude oil and/or draw down on the stored volumes, oil prices would likely fall by $5.00 to $7.00 per barrel.”
According to data from S&P Global Platts, Shipments of Iranian oil fell below 550,000 b/d (barrels per day) in June from about 875,000 b/d in May and about 2.5 million b/d in June 2018.
Trade war: Africa in the mix
According to the International Monetary Fund (IMF), 95 percent of South Sudan foreign revenue come from oil exports to China, and Angola exports at least 60 percent it’s oil and minerals to China.
The African Development Bank (AfDB) is alarmed over the U.S – China trade war and has warned it will result in African countries having a 2.5 percent reduction in GPD and a 1.9 percent reduction of oil exports, in which, the trade war ceases to be between the two economic giants, but between the two and the rest of the developing countries.
The high tariffs on Chinese goods by the US has prompted China to retaliate by seeking Iranian Oil in millions of barrels, a move likely to weaken African firms in such sectors, since China will not be able to import products from other developing countries.
Most likely, exports are bound to decline in developing countries, since many of them depend on China’s strong financial muscle.
The trade war is also likely to weaken Chinese firms that have been investing in developing countries, especially those in Africa, in the process retarding their developmental strategies.
Developing countries must therefore come up with strategies to stay afloat while the two nations sort out their differences.