China's Oil Market Fares Well After Iraq Crude Export Halt

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Last updated at: (Beijing Time) Friday, April 12, 2002

China's Oil Market Fares Well After Iraq Crude Export Halt

China's crude oil market will be unaffected in the short term by Iraq's announcement that it would halt crude exports starting Monday for 30 days, because the crude supply from Iraq only occupied a very small market share and Iraq was not the major source of oil imports for China.

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Beijing raises oil prices

China's crude oil market will be unaffected in the short term by Iraq's announcement that it would halt crude exports starting Monday for 30 days, predict oil analysts.

Liu Keyu, director of the China Petroleum Economy and Information Research Center, said that Iraq's decision to cut oil supplies could not harm China, because the crude supply from Iraq only occupied a very small market share and Iraq was not the major source of oil imports for China.

The major oil import countries for China are Iran, Saudi Arabia and Syria.

Statistics show that Iraq has a maximum production capacity of 2.3 million barrels per day and exported about two million barrelsa day last year, just four percent of the daily global supplies.

Tian Chunrong, a senior market analyst with China Petro-Chemical Co. (Sinopec), said that in 2001, China only imported 400,000 tons of crude oil from Iraq and this year only 130,000 tons. Therefore, Iraq's cutting of the crude supply could not affect China at all.

Liu pointed out that Iraq's decision would not be supported by other major members of the Organization of Petroleum Exporting Countries (OPEC), because many Gulf states depended on oil revenues for most of their government income and could not afford to stop sales.

Tian said that normally the domestic oil price fluctuations had a direct bearing on the price fluctuations of the three major world oil markets in Singapore, Rotterdam and New York.

Earlier this year, oil prices in the three major markets surged due to the expected economic recovery in the United States and OPEC's insistence on reducing production to maintain the global oil price at between 22 and 28 U.S. dollars a barrel.

During that time, China's oil price also surged, but it did not have any connection with Iraq's decision to cut oil exports.

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