The highest US crude oil exports to China in 11 months lifted total seaborne US crude oil exports to a record high at 11.9 million (m) tonnes in June 2019. Also contributing to the June record was South Korea, as exports to the other main Far Eastern buyer reached an all-time high volume of 2.3m tonnes.
1.2m tonnes were shipped to China between June 1, and June 30, , up from 1m tonnes in May and worlds apart from no exports at all in the months of August through October in 2018 and again in January 2019.
“From being a very consistent and significant buyer of US crude oil until the trade war changed it all, China was back above a 1 million tonnes in June 2019.
As China stopped buying in August 2018, South Korea became the no 1 destination for US seaborne crude oil, taking 1.5m tonnes on average per month in 2019, and setting a record of 2.3m tonnes in June 2019.
From a shipping perspective, long-haul exports to Asia are great. As China retreated last year, India, Taiwan, Japan and Singapore stepped up alongside South Korea to keep the very long sailing distances around. Tonne mile demand was also record high in June” saoidPeter Sand, BIMCO’s Chief Shipping Analyst.
Taking 2.3m tonnes of crude oil from the U.S. in June, meant that South Korea was the main destination, buying 19% of total seaborne US crude oil exports in that month.
Even though it isn’t crude oil of the same characteristics, the growth in South Korean imports from the US comes at a time when it’s been cutting its imports from Iran significantly. South Korean imports from Iran are down from 1.2m tonnes in March to zero in May and June according to official statistics.
The same goes for India, which imported an average of 1.3m tonnes in March through June from the US, while cutting its Iranian imports sharply from 1.4m tonnes in March and April to zero in June. India used to be Iran’s second largest buyer of crude oil after China.
“Crude oil tankers enjoy higher tonne mile demand, when India turns to the US instead of Iran to source its need for crude oil.
Geopolitical instability is often the main reason behind changes in the trade patterns of the oil tanker market.
Despite growing tonne mile demand, crude oil tanker earnings have generally been lossmaking so far in 2019,” says Peter Sand.