Page 7 - MEOG Week 10 2022

MEOG COMMENTARY MEOG

been considered unlikely by many analysts right What next?
up until it happened, it also now cannot be ruled Against this backdrop of increased uncertainty
out that tougher sanctions may be brought in at a over how easy it will be to continue buying Rus-
later date, which do target energy payments and sian oil over the coming weeks, Asian refiners
flows. are increasingly eager to resume crude imports
S&P Global Platts cited feedstock managers from Iran.
at major South Korean, Indian and Japanese Asia is traditionally a major buyer of Ira-
refineries as saying purchasing Far East Russian nian oil, but most refiners in the region halted
sweet crudes, including Sokol, ESPO and Sakha- crude purchases from Iran in 2019 after former
lin Blend, may become more challenging going US president Donald Trump withdrew from
forward. And some companies may opt to take a the 2015 nuclear deal with the Middle Eastern
stance on no longer buying Russian oil, for both country and reimposed sanctions against its oil
commercial and political reasons, if the situa- exports.
tion in Ukraine worsens and further sanctions The conflict in Ukraine has added to momen-
on Russia are introduced. tum behind talks to restore the Iranian nuclear
On the other hand, analysts have also high- deal, and there have been expectations that it
lighted the potential for Russia to pivot more could be signed in the coming days. At the same
towards Asian refiners as buyers in Europe step time, though, there are mixed reports emerging
up efforts to diversify their sources of crude sup- over how challenging the final hurdles are that
ply. In Rystad Energy’s oil market note this week, would need to be cleared before the deal can be
the consultancy noted that European refiner- finalised.
ies were attempting to “reshuffle” purchases of Several refiners from South Korea, Japan and
Urals crude for other comparable medium sour India have recently signalled their willingness
grades, including Saudi Arabian and Iraqi oil. to resume importing Iranian crude as soon as
The consultancy said that if Europe rejects a new nuclear deal is reached. And China has
Urals crude, which is now trading at a discount continued to import some Iranian oil, with the
to Brent, then there would still be buyers for it. US opting not to enforce sanctions against the
It added that Asian refiners in particular would Chinese companies involved as talks between
have the opportunity to buy the rejected barrels Washington and Tehran have progressed.
and capitalise on the discount. The New York There is considerable uncertainty about what
Times also flagged up efforts by Russian com- the coming weeks will bring, but Asian refin-
panies to sell their crude to refiners in China and ers could find themselves benefiting from how
elsewhere in Asia. things are playing out elsewhere in the world.™

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