Saudi keeps top China crude spot as Iran plunges

Despite attacks in the Strait of Hormuz and on the Kingdom, tankers continue to supply China with record amounts of Saudi crude. (Shutterstock)
Updated 26 September 2019

Saudi keeps top China crude spot as Iran plunges

  • Despite attacks on Gulf refineries, Riyadh to Beijing oil flows continue to grow

BEIJING: Saudi Arabia held on to its spot as China’s largest supplier of crude in August for the second straight month, official customs data showed on Wednesday, although this month’s attack on Saudi oil processing facilities may end the run. 

Saudi oil arrivals in August in China, the world’s biggest oil importer, reached 7.79 million tons, or 1.83 million barrels per day (bpd), data from the General Administration of Customs showed, compared with 6.99 million tons in July and nearly double the previous year. 

Amid sanctions by the US on Tehran and rising Middle East tensions, China’s oil imports from Iran were 787,657 tons, down from July’s 926,119 tons and far below 3.28 million tons of a year ago. 

Most of the August arrivals were discharged at Jinzhou and Tianjin ports in China’s northeast, where it has state reserve and commercial tanks, indicating volumes continuing to flow into the country’s strategic storage sites, according to Refinitiv Oil Research. 

China said days after the drone attack on Saudi oil facilities that knocked out half the output of the world’s top oil exporter that the nation’s crude reserves, including stocks held at strategic petroleum storage sites and commercial inventories, were sufficient to cover 80 days. 

Imports of US crude oil reached 1.01 million tons last month, versus 1.5 million tons in July, with volumes likely to more than halve in September as Beijing started levying a 5 percent tariff as the trade war with the US escalated.

Imports from Russia, China’s second largest supplier for August, reached 6.02 million tons, up from 5.673 million tons in July and 5.7 million tons in August last year. 

Oil prices fell for a second day on Wednesday amid worries fuel demand could fall after US President Donald Trump doused recent optimism over China-US trade talks.

Brent crude futures were down by more than a dollar in early London trade on Wednesday. Nevertheless, the benchmark remains on track for its first monthly gain since June.

“Focus will return to faltering oil demand concerns as there is unlikely to be any quick resolution to US-China trade differences to positively shift economic expectations,” global oil strategist at BNP Paribas Harry Tchilinguirian told the Reuters Global Oil Forum.

Trump criticized China’s trade practices at the UN General Assembly on Tuesday and said he would not accept a “bad deal” in US-China trade negotiations.

Italy mulls $1.1bn rescue for ailing bank Pop Bari

Updated 1 min 9 sec ago

Italy mulls $1.1bn rescue for ailing bank Pop Bari

  • The government wants a deposit guarantee fund financed by Italian banks to take part in the rescue by providing as much as €500 million

ROME: Italy’s Cabinet was expected to meet on Sunday evening to approve a decree that would provide a €1 billion ($1.1 billion) lifeline to cooperative lender Banca Popolare di Bari, two sources with knowledge of the matter said.

The bank, which said last week it needed an urgent injection of up to €1 billion, has struggled to cope with mounting loan losses during a slump that has devastated Italy’s economy, notably in Popolare di Bari’s home region in the south.

It was placed under special administration by the Bank of Italy on Friday but the government led by Prime Minister Giuseppe Conte failed to approve a rescue package as several ministers boycotted a hastily convened Cabinet meeting.

One of the sources, who has seen a draft of the decree, said the plan called for the injection of €1 billion into state-owned Banca del Mezzogiorno-Mediocredito Centrale. Of these funds, 500 million would be used to recapitalize Popolare di Bari and the rest would be set aside in case of future requirements.

The government wants a deposit guarantee fund financed by Italian banks to take part in the rescue by providing as much as €500 million.

The Interbank Deposit Protection Fund (FITD), whose executives are due to meet this week, said this month it had been asked for help by Popolare di Bari but wanted to examine the bank’s business plan before making a decision. The crisis at Popolare di Bari has heaped pressure on Conte’s coalition, which brings together the anti-establishment 5-Star Movement and the center-left Democratic Party.

Only hours before the urgent Cabinet meeting on Friday night, Conte said the banking system was in good health and there would be no need for state bailouts, prompting the right wing opposition League Party to call on him to resign. The meeting ended without approving an expected rescue package for Popolare di Bari as ministers from 5-Star and a small party led by former PD leader Matteo Renzi stayed away.

5-Star leader Luigi Di Maio said on Saturday he wanted to know why the bank had been allowed by the Bank of Italy, the sector supervisor, to deteriorate so badly and which bank managers were responsible before approving the rescue.

Since 2016, Italy has had to rescue several of its banks, including Monte dei Paschi di Siena and two Veneto lenders, rescues that 5-Star — which at the time was in opposition — slammed as a waste of taxpayer money to help bankers.

With 5 Star and the PD at loggerheads over a growing list of economic issues, from the fate of airline Alitalia to the troubled Ilva steel plant in southern Italy, the crisis could have potentially serious implications for the government.