American and African Crudes Soar as China's Oil Imports Rebound

Oil prices for crudes from Canada, South America, and Africa have surged recently, driven by a rising demand for Chinese oil imports, higher benchmark prices, and ongoing disruptions in Middle Eastern supply. One African crude, Djeno from Congo, is now trading at a $20 per barrel premium over ICE Brent, up from a $15 premium just two weeks ago, according to anonymous traders.

Canadian, Brazilian, and Argentine crudes are also experiencing price increases due to growing demand from Asian importers, including China, Japan, and South Korea. These importers are seeking to compensate for supply losses in the Middle East by purchasing oil from distant regions like Argentina. Asian refiners have already bought Argentine Medanito crude, and at least one cargo of oil comparable to U.S. West Texas Intermediate was loaded in August.

China, the world's largest crude oil importer, is increasing purchases of African and American grades, as well as Russia's favored ESPO blend, as Iranian crude supply has drastically declined following the U.S. re-imposed blockade on Iran's oil exports. While China's crude imports have rebounded from a decade-low in June, they are still far below pre-war levels of 11-12 million barrels per day, indicating the country's continued selective purchasing approach amid volatile and often spiking oil prices.

The country still possesses an estimated 1.4 billion barrels of crude in commercial and strategic storage before the Iran war began, giving it the flexibility to be picky about its crude purchases. The biggest losers in China's refining industry are now the small independent refiners who had long relied on cheap Iranian and Venezuelan crude, as these sources are now scarce.