Iran to compete with Russia, Saudi Arabia to supply China's huge demands for oil

In the race to supply crude to the world’s biggest energy user, it’s the tussle for second place that’s too close to call.

Russia, Angola and Iran are vying to be runner-up to Saudi Arabia as the top seller to China. The contest is set to intensify as Iran seeks to recover market share lost because of sanctions and the US Congress debates a nuclear deal that will allow the Persian Gulf state to boost shipments.

China overtook the US as the biggest importer of crude most recently in June, taking advantage of a 50 per cent slump in benchmark prices over the past year to boost strategic reserves. With the Asian nation forecast to account for more than a quarter of global demand growth in 2016, the prize of becoming a top supplier will bolster the economic health of national producers that depend on energy exports for most of their budget revenue.

"Whether you’re number 2 or number 3, the numbers are very close," said Victor Shum, a vice-president at consultant IHS. "In a globally oversupplied market, there is more competition for the growing Chinese pie."

China is the biggest oil buyer in Asia, a region that the International Energy Agency estimates will use 23.4 million barrels a day in 2015, or about 25 per cent of worldwide consumption. The IEA predicts China will consume 10.9 million barrels a day this year.

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Iran, the second-biggest producer in the Organization of Petroleum Exporting Countries before its nuclear programme prompted the European Union to ban purchases of its crude in 2012, will boost production "at any cost" to reclaim market share, Oil Minister Bijan Namdar Zanganeh last month said China is the Islamic Republic’s biggest customer, and Zanganeh has signalled it’ll target Asia for sales. Iran currently lags behind its rivals in shipments to China.