China stops buying Iranian oil
China and a number of other states have stopped buying oil from Iran after the U.S. announced a decision not to extend exemptions from its sanctions for certain countries, the Wall Street Journal reported, citing sources in the Iranian oil industry.
According to member of the economic commission of the Iranian parliament Rahim Zare, China, Greece, India, Italy, Japan, South Korea, Taiwan and Turkey, which were previously granted waivers, purchased from Iran a total of 1.6 million barrels of oil daily in March, but have ceased purchases since.
"They are really abiding by the sanctions," the newspaper cited him a saying.
The newspaper noted that when a tanker belonging to China was loaded from the oil terminal on Kharg Island in Iran in mid-May, it was perceived as the resumption of purchases of crude oil by Beijing. However, the tanker subsequently sailed to Indonesia, and at the moment remains off the coast of Iran in the Gulf of Oman, the newspaper said, citing maritime tracking resource FleetMon.
At the same time, Iran has not yet lost hope of resuming sales to China. A private Iranian trader, who last delivered Iranian oil to China two months ago, said he was negotiating the sale of up to 2 million barrels to a Chinese mini-refinery, but noted he had not yet received the approval of the governments of the two countries.
Eight of Iran’s top oil customers were granted waivers that allowed them to temporarily continue buying Iranian oil. In April, the White House announced that the U.S. would end waivers for oil sanctions on Iran as it seeks to bring the country’s oil exports to zero. The United States said the eight nations had agreed to dramatically reduce oil imports from Iran.
A senior analyst of 'Uralsib', Alexei Kokin, speaking to Vestnik Kavkaza, noted that we should not expect a surge in oil prices now. “It wasn't big news for the market. Everyone knows that Chinese companies work all over the world and don’t want to have any difficulties with U.S. sanctions. This week there have already been reports that exports from Saudi Arabia to China reached record levels, which means that the Chinese have already shifted from Iran to Saudi Arabia," he recalled.
"At the same time, it is important to note that only large Chinese companies have abandoned Iranian oil, while some small ones will probably use some gray schemes. If we talk about the official import of Iranian oil to China for such companies as CNPC and Sinopec, apparently, it is close to zero indeed now. But small refineries may well take risks, since American sanctions do not affect them, they only work on the domestic market," Alexey Kokin pointed out.
"The Iranians may also continue to try selling their oil to China. In terms of the global market, only one indicator is important - how much physical oil is sent from Iran to foreign markets, and it does not matter whether it goes to China or not. And this indicator can be tracked, only if one watches tankers leaving Iranian terminals from space day and night," the senior analyst of 'Uralsib' said.