News ID: 253503
Published: 0218 GMT May 29, 2019

China’s oil imports from Iran jump 21% before US waiver removal

China’s oil imports from Iran jump 21% before US waiver removal

China’s crude imports from Iran jumped by a fifth last month before the US removed sanction waivers on oil purchases from the Middle Eastern country, Financial Times calculations show.

Data from China’s General Administration of Customs show the country imported 3.24 million tons of crude from Iran in April, a year-on-year rise of 21 percent. The figure soared 46 percent in April from March.

In the year to date, China’s purchases of crude oil from Iran remain below last year’s levels.

The surge in imports came before the US ended sanctions waivers on Iranian oil for eight nations including China in April, in an effort to pressure the regime in Tehran and bring Iran’s crude exports “to zero”. The US extended the waivers by six months ahead of the anticipated start of sanctions late last year.

Iran was China’s seventh-largest crude supplier in 2018, accounting for about six percent of imports. Analysts said China was unlikely to eliminate oil imports from Iran entirely.

Li Li, the director of research at ICIS, a petrochemical consulting firm, said she expected China to continue purchases.

“We may see a drop in China’s oil imports but they will continue purchases whether officially or unofficially,” said an Iranian energy sector businessman with links to the political establishment.

The Chinese government voiced strong opposition following Washington’s decision not to extend the waivers, saying its dealings with Iran were “reasonable and legitimate”.

It condemned unilateral sanctions and warned the move would destabilize the international energy market.

Since then, Sino-US trade tensions have worsened, throwing China’s compliance with US demands over Iran further into doubt.

“Everyone knew the waivers were up so it was natural to buy more ahead of time,” said Lin Boqiang, energy expert at Xiamen University. Chinese oil companies exhibited a similar bump in purchase volumes ahead of the expected start of sanctions last year.

“But it may be inconvenient to buy more now,” he added.

Iran’s hopes of withstanding US sanctions will receive a boost if China continues buying oil, even in smaller volumes than before.

However, Iran’s Oil Ministry said it would not disclose details even to insiders on how it was circumventing oil sanctions on fears the information could leak to the US.

Reuters reported on Wednesday that Iranian crude exports in May amounted to around 400,000 barrels per day (bpd), tanker data showed and two industry sources said.

Iran has sent abroad about 400,000 bpd so far this month, according to data from Refinitiv Eikon and two industry sources who also track the flows, less than half April’s rate. The bulk of the crude is heading to Asia.

“I am expecting exports of about 400,000 bpd,” one of the sources said, which would be an increase from around 250,000 bpd in the first two weeks of the month. The second source said May exports could reach as much as 500,000 bpd.

There is no definitive information on the export rate. Iran has welcomed this opacity and stopped reporting its production figures to the Organization of the Petroleum Exporting Countries (OPEC).

Some of Iran’s oil exports are already under the radar, making it harder to assess the actual volume.

The latest figure for May exports shows more consensus on how much oil is still reaching the market than an estimate published on May 16, in which shipments were put at between 250,000 bpd and 500,000 bpd.

The oil industry has for some years used tanker-tracking to work out actual supplies in the absence of timely official information. While easier than in the past due to satellite information, tanker tracking is not an exact science.

Tankers loading Iranian crude sometimes switch off their AIS signal, an automatic tracking system used on ships, only to switch it back on at a later stage of their journey, according to oil industry sources, making it harder to see actual volumes.

 

   
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