Iran is expected to face challenges in reducing its oil inventory glut even as restrictions on energy exports are lifted. This comes as demand from its main customer, China, weakens while global oil supplies continue to rise.
China, the world's largest crude oil importer, is seen increasingly reducing its oil purchases. According to analysts, China has not only reduced imports from Iran, but also limited purchases from most other producing countries.
Data showed that China's crude oil imports in May fell 29% from a year ago to 7.82 million barrels per day, the lowest level since February 2018. China's Iranian oil imports were reported to have fallen by more than 50% in June to around 654,000 barrels per day.
At the same time, China continues to accelerate the transition to clean energy by focusing on the development of non-fossil energy. The move is expected to further reduce the country's dependence on oil in the long term.
Pressure on oil prices is also expected to increase as OPEC+ agreed to increase production by 188,000 barrels per day from August. Since the Iran conflict broke out, the group has increased its production quota by 940,000 barrels per day.
In addition, Iran is now actively increasing exports after sanctions on its shipping activities were eased, while Russia is also adding supplies to the global market. This situation has caused an oil oversupply to become more pronounced.
Despite the increasing supply, risks to the energy market have not disappeared. Iran has hinted that shipping routes in the Strait of Hormuz may no longer be free after a period of 60 days, with the possibility of tolls being imposed depending on each country's diplomatic relations.
The move has the potential to affect global oil supply flows and future price movements.
