- China’s position in oil markets could ease aggression between producers, Paul Sankey told CNBC.
- “A lot of this is because China is standing behind the curtain and saying, you know, can you please not interrupt our oil supply?”
- Meanwhile, the United States is voting on whether to apply sanctions between Iran and China, Bloomberg reported.
China’s major participation in crude markets could be a calming factor in a context of geopolitical tensions, suggested oil expert Paul Sankey in an interview with CNBC.
“It’s interesting that the Venezuelan threats to Guyana are going nowhere, the Iranian threats are just fading away,” the Sankey Research founder said. “And I think a lot of that is because China is standing behind the curtain and wondering, you know, can you please not interrupt our oil supply? We don’t have no need for a problem here because we have our own problems.”
After all, the country is the world’s largest buyer of crude and a crucial customer of Western-sanctioned producers. This includes Russia and Iran, with whom China has effectively created an alternative oil market, the Atlantic Council said in March.
China’s massive crude purchases from Tehran are Sankey’s way of explaining the oil market’s muted reaction after tensions between Iran and Israel erupted over the weekend: Brent crude, the international benchmark, is in fell below 90 dollars per barrel until Monday.
“I think the main thing behind this is the supply of oil from Iran to China. You know, I think the key is getting the oil to the East,” he said .
According to Reuters, small Chinese refineries absorb 90% of Iran’s total oil exports.
Echoing a JPMorgan analysis released after the weekend, Sankey acknowledged that no country has an interest in continuing deeper hostilities and expects some form of sanctions to be applied to Tehran.
This already appears to be underway, with the US House of Representatives voting on Monday on whether to expand secondary sanctions on Iran, Bloomberg reported. The legislation would also target Iran’s crude oil trade with China.
Meanwhile, tensions between Venezuela and Guyana appear to persist, although few major developments have occurred in recent months. The conflict between the two oil producers emerged in late 2023, when Caracas announced it would annex an oil-rich region belonging to Guyana.
